2021 Annual Report
The people who work for this agency are caring and accommodating. They really listen and are always
In addition to the training and
Marissa was super knowledgeable about the different
helpful. You get to talk to compassionate people not recorded messages. They have become family and
opportunities, the Company is steady
coverages and really helped me narrow down the best
that is very rare in today’s society. I would and have recommended them to my family and friends.
and strong with consistent growth year
plan for myself. With being a travel nurse my plans
- Debbie, Policyholder
over year. With strong management,
were always changing between companies but it is
the Company is sure to be around for
nice to have the reassurance and not worry! Thank
many more years to come.
you again Marissa for the wonderful help.
Globe Life has been my favorite employer since
Earnest was very thorough in
- Erika, Employee
- Angelina, Policyholder
I started in 2006. If you have to spend time with
fulfilling my policy needs. I felt like I
people 8 to 9 hours per day, it should be around
was getting fitted for a suit that fits
people you enjoy and Globe Life has some of the best
perfectly! Will be adding even more
people you will ever meet.
coverage soon to come!
Very affordable and easy
I’m glad I took the 15 minutes to hear what Diana had to offer. The
- Anna, Employee
- Vonte, Policyholder
to understand. I’m looking
Globe Life Liberty National Worksite Advantage program was
forward to moving along in my
exactly what I was looking for for my small business employees! I
journey knowing you guys have
highly recommend the program to other business owners looking
my back. Thank you.
to establish or enhance benefits for their employees. Give Diana 15
Family Hertiage allowed me to surround
I love United American Insurance’s service. They
- Dylan, Policyholder
minutes. You won’t regret it!
myself with the kind of people that not only
are the best company I’ve got. I’ve got several
teach me to run a business, but also how to
more but none of them are as good as they are.
be a better person.
They do what they say they’d do.
- Gage, Policyholder
- Aaron, Agency Owner
- Edna, Policyholder
After losing a loved one Jakwanza built
Wow! For once an insurance policy that pays
a bond with me and my family in our
you back! We have paid into insurance half our
time of need. She was very helpful and
lives, never used it because we are healthy and
concerning. It wasn’t just about a policy.
for the most part not accident prone. Jason was
The application was
My husband passed away a few months ago and everyone I
Thank you all Globe Life!
brilliant in explaining this program, and was
completed in no time with a
talked to was so very kind and helpful during the most difficult
- Conetric, Policyholder
very knowledgeable and professional. I will refer
few easy questions about my
time of my life.
health and it was done. My
questions were answered
honestly without a lot of
double talk. Overall great
experience, great service.
- Alice, Policyholder
I believe job satisfaction is a key to a happy career. My favorite
part about Globe Life is that it allows me to learn and expand
into new areas. If you’re looking for opportunities for growth,
people for sure!
- Linda, Policyholder
After the death of my brother, not once did I call Globe Life and the person on the other end of the phone
not offer their condolences. This really meant a lot to me. They were very professional and considerate and
- Jerry, Policyholder
then Globe Life is for you.
caring. Thanks Globe Life!
- Syed, Employee
- Dian, Policyholder
I just signed up for Globe Life. It was the easiest thing to sign up for, my agent, Pam, was very
We’re very happy with United American. We met with this guy right after I retired so I’ve been with him for
knowledgeable in everything that they offer and was not pushy at all! I have had a similar type of benefits
a long time. He’s at our disposal and he’s great. I’ve given him a lot of business from some other friends of
in the past that were more expensive with the same payout amount if you filed a claim. My other policy
mine. My husband and I were in New York and he fell and broke his hip. We were thinking of the load of bills
also didn’t allow you to receive the money back if you didn’t file a claim — Globe Life does!
we were going to get. We have Medicare but everything was covered with United American.
- Kayla, Policyholder
- Ronni, Policyholder
2021 In Focus
$ in thousands
$4,099,887
Total Premium
Financial Highlights
$ in thousands, except per share amounts
$707,497
Net Operating
Income
$744,959
Net Income
$2,943,185
Annualized Life
Premium In Force
$1,286,078
Annualized Health
Premium In Force
2021
2020
% CHANGE
OPERATIONS
Total Premium
$4,099,887
$3,813,905
Net Operating Income1
707,497
737,592
Net Income
744,959
731,773
Annualized Life Premium In Force
2,943,185
2,739,949
Annualized Health Premium In Force
1,286,078
1,193,362
Diluted Average Shares Outstanding
103,170
107,225
7.5
4.1
1.8
7.4
7.8
3.8
Net Operating Income as a Return on
Average Equity (excluding net unrealized
gains on fixed maturities1)
Net Income as a Return on Average Equity
PER COMMON SHARE
(on a diluted basis)
Net Operating Income1
Net Income
Shareholders’ Equity (excluding net
unrealized gains on fixed maturities1)
12.3%
8.8%
$6.86
7.22
58.50
13.5%
9.5%
$6.88
6.82
0.3
5.9
53.12
10.1
1The following financial measures utilized by management and contained in the following Letter to Shareholders are considered non-GAAP: net operating income; net operating
income as a return on average equity, excluding net unrealized gains on fixed maturities; book value (shareholders’ equity) per share, excluding net unrealized gains or losses on fixed
maturities; underwriting income or margin (consolidated). Globe Life includes non-GAAP measures to enhance investors’ understanding of management’s view of the business. The
non-GAAP measures are not a substitute for GAAP, but rather a supplement to increase transparency by providing broader perspective. Globe Life’s definitions of non-GAAP measures
may differ from other companies’ definitions. Reconciliations to GAAP financial data are presented on pages 16–17.
1
Letter to Shareholders*
Since our roots began in 1900, Globe Life has applied a
simple, four-pronged approach to success: we grow as
a Company when decisions are made that are equally
beneficial for our customers, shareholders, agents, and
employees. Simply put, everything we do is intended to
help Make Tomorrow Better.
We help our customers protect what matters most to
them, by providing working families with insurance
solutions designed to meet their specific needs. We are
committed to creating value for our stakeholders and
rewarding our shareholders for their investment and their
trust. We are dedicated to empowering people to pursue
their dreams and careers as employees and agents.
We focus on cultivating a healthy, positive culture that
promotes a thriving, diverse workforce.
As part of our purpose-driven mission, we are committed
to giving back to communities where we live, work,
and serve. Our primary focus is to help underserved
youth and families, support seniors, and promote
health and wellness.
In 2021, we entered another year of the pandemic.
Despite the unpredictability of the virus and associated
economic challenges, Globe Life continued to generate
positive results in our core operations, including sales
and premium growth and strong return on equity.
Globe Life’s overall performance in 2021 remained
positive. In the first quarter of 2021, we exceeded
$1 billion in total premium revenue for a quarter for the
first time, and we appreciate the efforts of our agents
and employees in achieving this milestone. Both total
premium and total net sales grew approximately 7%.
Net operating income as a return on equity, excluding
net unrealized gains on fixed maturities, was 12.3%.
The consistent execution of our business model produces
strong results year after year, regardless of macro
environment changes, and is fundamental to Globe Life’s
success. This model is summarized below.
Market
Distribution
Cash Flows
We believe everyone should have access
to financial services. By offering quality,
affordable insurance to working families
in the underserved, lower-middle to
middle-income market, we enable them
to face the unexpected from a position
(cid:82)(cid:73)(cid:98)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:98)(cid:86)(cid:87)(cid:85)(cid:72)(cid:81)(cid:74)(cid:87)(cid:75)(cid:17)(cid:3)
We distribute our products to individuals
and worksites using in-person and virtual
platforms primarily through exclusive agency
and direct to consumer marketing channels.
In doing so, we effectively manage costs,
which leads to consistent underwriting
margins. Our agency force is a widely diverse
group of individuals that reflects the diverse
demographics of the market we serve.
Approximately 90% of Globe Life’s premium
revenue is generated from policies sold in
prior years. The persistency of our in-force
block of business is extraordinarily stable
and thus consistently provides substantial
excess cash flow.
Products
Margins
We are committed to providing financial
protection to our policyholders at the times
they need us most: after a death, or during an
illness or health scare. Our basic protection
life and supplemental health products help
people pay the bills, put food on the table,
and provide for their children.
We are able to manage our business
efficiently due to our focus on expense
control along with the experience and data
we have accumulated over more than 60
years serving the same market with the same
products. Globe Life does not have to rely on
investment income to generate operating
income. Approximately 74% of the Company’s
pretax operating income comes from
underwriting income.
*Throughout this letter net operating income represents net operating income from continuing operations.
2
Return of Excess
Capital to Shareholders
A key component of our capital management
program is to return excess capital to
shareholders. Since 1986, Globe Life has
returned approximately 70% of its net income
to shareholders through share repurchases
and dividends.
Our Growth
Globe Life has consistently generated a strong return on equity (ROE). In 2021, net income as an ROE was 8.8%,
and net operating income as an ROE, excluding net unrealized gains on fixed maturities, was 12.3%.
Globe Life’s business model provides products and career opportunities to people in underserved markets, along
with sound fiscal management. Sales and marketing technology allows us to more efficiently engage in recruiting, lead
generation, training, business conservation, sales activities and provides management dashboards for visibility into the
business and agent lifecycle.
The charts below demonstrate the growth in earnings per share and book value per share.
Net Income Per Share
Compound Annual Growth Rate:
10-Year: 9.1%, 5-Year: 10.0%
$12.221
Net Operating Income
Per Share
Compound Annual Growth Rate:
10-Year: 9.0%, 5-Year: 8.8%
$6.751
$6.86
$4.82
$6.83
$7.22
$4.13
$3.65
$2.91
$3.79
$4.16
$3.02
2011
2013
2015
2017
2019
2021
2011
2013
2015
2017
2019
2021
Book Value Per Share
Compound Annual Growth Rate:
10-Year: 13.0%, 5-Year: 17.9%
$85.97
$66.02
$52.951
$25.27
$27.66
$32.71
Book Value Per Share
(Excluding Net Unrealized Gains or Losses on
Fixed Maturities)
Compound Annual Growth Rate:
10-Year: 10.6%, 5-Year: 12.7%
$48.26
$58.50
$39.771
$30.09
$25.85
$21.31
2011
2013
2015
2017
2019
2021
2011
2013
2015
2017
2019
2021
1In 2017, tax legislation revised the corporate income tax rate from 35% to 21% effective Jan. 1, 2018, among other modifications.
3
Operations
A consistent measure of the performance of
Globe Life’s insurance operations is net operating
income. We believe net operating income provides
a better understanding of the profitability and
operating trends of our business. The same measure
is commonly used in the life insurance industry.
Underwriting income includes premiums less policy
benefits, acquisition costs, and administrative
expenses. Underwriting income is the primary
contributor to net operating income; approximately
74% of pretax operating income was produced from
underwriting income during 2021.
Distribution
Channels
Globe Life’s products are distributed via distinct
channels. Our exclusive agency divisions (American
Income Life, Liberty National, and Family Heritage)
market to individuals and worksites face to face
through in-person and virtual platforms. Our Direct
to Consumer Division provides adult and juvenile
life insurance protection to customers through the
Internet, direct mail, call center, and insert media
channels. United American is our independent (non-
exclusive) agency, marketing Medicare Supplement
and limited benefit supplemental health plans to
individuals and employer groups.
Globe Life effectively controls policy acquisition
and administrative expenses. This helps allow us to
maintain healthy underwriting margins. This chart
reflects the distribution of underwriting margin
among the channels.
4
Components of
Net Operating Income
($ in millions, except per share data)
Underwriting Income
Excess Investment Income
Tax and Other Parent Expenses
Net Operating Income
PER SHARE
$666
$6.46
239
(198)
2.31
(1.91)
$707
$6.86
Components of
Underwriting Income
($ in millions)
Underwriting Margin
– Life
– Health
– Other
Total
Admin. Expenses Net of Other Income
AS % OF
PREMIUM
21.5%
25.3%
22.8%
6.6%
$624
304
9
$937
(271)
Underwriting Income
$666
16.3%
2021 Total
Underwriting Margin
52%
12%
American Income Life Division
8%
10%
9%
9%
Liberty National Division
Direct to Consumer Division
Family Heritage Division
United American Division
Other
American Income Life remains a consistent leader
in premium and underwriting margin among Globe
Life’s distribution channels. In 2021, American
Income Life was the largest contributor of life
premium at 48% of Globe Life’s 2021 total life
premium.
The division generated life net sales growth of
15% in 2021. Over the past ten years, life net sales
have also grown at a compound annual growth rate
of 7.4%.
Historically, most customer leads were generated
from our partnership with organized labor. While
our union affiliation remains important, today more
than 70% of American Income Life’s leads come
from referrals, other affinity groups and third-party
internet vendors.
Sales growth in our exclusive agency divisions is
generally dependent upon the growth in the size
of the agency force. We expect American Income
Life to continue to have great recruiting opportunity
for years to come. Our agencies primarily recruit
underemployed individuals looking for a better
opportunity, and there will always be a large pool
of such individuals, regardless of macroeconomic
conditions. In addition, we go forward with the
ability to recruit both virtually and in person. The
vast majority of customer appointments are now
virtual. The ability to meet customers face to face
both virtually and in person greatly enhances this
division’s growth potential.
American Income Life helps retain its agents with
an emphasis on strengthening agency middle-
management growth through financial incentives
and training opportunities, as well as providing
leadership development opportunities through the
opening of additional agency offices.
American Income Life
Agent Count at End of Year
Compound Annual Growth Rate: 10-Year: 8.0%
2021 9,415
2019
7,551
2017
6,880
2015
6,552
2013
5,302
2011
4,381
American Income Life
Life Net Sales
Compound Annual Growth Rate: 10-Year: 7.4%
($ in millions)
$291
$238
$223
$198
$142
$153
2011
2013
2015
2017
2019
2021
5
Liberty National has expanded its reach far beyond small-town markets in the Southeast to include more
heavily populated, less-penetrated areas across the United States. As our oldest distribution channel, it
distributes basic life and supplemental health insurance products in the individual and worksite markets.
Total life net sales for Liberty National grew 30% year over year. This robust growth is attributed to the
division’s ability to return to in-person customer interaction particularly in the worksite market, as well as
the continued option for virtual sales in both the individual and worksite arenas. As shown in the charts,
agent count and total net sales have grown at a compound annual growth rate of 9.8% and 10.3%,
respectively over the past five years.
Recent investments in CRM technology and enhanced analytical capabilities have helped agents in the
worksite market develop new marketing opportunities and improve the productivity of agents in the
individual market. Coupled with a focus on growth in agency middle management, these improvements
will help Liberty National continue to grow sales, agent count, and agent productivity.
Liberty National Division
Total Net Sales
Compound Annual Growth Rate: 5-Year: 10.3%
($ in millions)
$98
$78
$78
$67
$71
$60
2016
2017
2018
2019
2020
2021
Liberty National Division
Agent Count at End of Year
Compound Annual Growth Rate: 5-Year: 9.8%
2021
2,804
2020
2,770
2019
2,660
2018
2,159
2017
2,106
2016
1,758
6
The acquisition of Family Heritage in 2012 provided Globe Life an opportunity to grow its supplemental health business.
Family Heritage primarily markets limited-benefit health insurance products in non-urban areas and smaller cities
throughout the United States.
A unique aspect of the majority of Family Heritage’s health products is a return of premium feature, which refunds any
excess of premiums received less claims paid to the policyholder at the end of a specified period. Family Heritage’s
products produce persistency, profit margins, and investment income that are stronger than those of typical health
insurance products.
In 2021, Family Heritage had a 3% increase in health net sales. Since 2016, agent count and health net sales have risen at
a compound annual growth rate of 4.9% and 7.4%, respectively.
Recent and continued investments in CRM technology, sales, and training along with incentive programs will help drive
an increase in Family Heritage’s productivity and agent count.
Family Heritage Division
Agent Count at End of Year
Compound Annual Growth Rate: 5-Year: 4.9%
2021
1,157
2020
1,463
2019
1,286
2018
1,097
2017
1,076
2016
909
Family Heritage Division
Health Net Sales
Compound Annual Growth Rate: 5-Year: 7.4%
($ in millions)
$60
$57
$51
$71
$73
$66
2016
2017
2018
2019
2020
2021
7
Direct to Consumer Division
Life Net Sales
Compound Annual Growth Rate: 10-Year: 0.8%
($ in millions)
$164
$137
$144
$149
$136
$126
2011
2013
2015
2017
2019
2021
Direct to Consumer Division
Life Premium
Compound Annual Growth Rate: 10-Year: 5.0%
($ in millions)
$971
$856
$813
$747
$664
$594
2011
2013
2015
2017
2019
2021
Direct to Consumer offers adult and juvenile life
insurance protection to the lower-middle to middle-
income market across the United States. Though it
started in the 1960s as a direct mail-only distribution
center, over the years it has transformed into a
multichannel division with internet, call center,
direct mail, and insert media channels. This provides
a significant competitive advantage, as we have
multiple opportunities to monetize leads.
Continued enhancements in technology have
generated rapid growth in digital media (internet
and inbound call center) production over the last
several years.
The 10% decline in life net sales in 2021 was
expected due to the extraordinary level of sales
activity seen in 2020 during the onset of COVID-19.
In addition to the sales it provides, Direct to
Consumer contributes to the success of our
exclusive agencies through support of their lead
generation and data management efforts.
We hold competitive advantages in digital and
traditional consumer targeting, advanced analytics,
and production efficiency. We are currently working
on extending our data, technology, and analytic
competencies to the rest of the organization
in order to help achieve an enterprise-wide
omnichannel experience.
This division’s long-term growth will be fueled by
constant innovation designed to increase response
rate and brand recognition. As Globe Life’s second
largest division, Direct to Consumer remains a key
contributor to Globe Life’s success.
8
United American uses independent (non-exclusive)
agents and brokers to primarily market Medicare
Supplement and limited-benefit supplemental
health plans, such as critical illness to individuals and
employer groups. United American produces 82%
of the Company’s Medicare Supplement premium,
and 95% of Medicare Supplement net sales. While
life insurance is Globe Life’s core business, we still
like the Medicare Supplement market as we have
the experience and systems in place to efficiently
manage this business and generate consistent
profit margins.
In 2021, Medicare Supplement net sales increased
2% year over year, while health underwriting margin
dollars for United American increased 9% from
2020. We remain committed to growing
this distribution channel while maintaining our
profit margins.
In August 2021, Globe Life acquired Beazley
Benefits, now rebranded as Globe Life Benefits.
Prior to the acquisition, it was part of Beazley
Insurance Company, Inc., a subsidiary of London-
based specialty insurer Beazley plc. Globe Life
Benefits uses independent brokers to extend our
reach in the worksite market using customized
supplemental health solutions for the employee
benefits market. Their wide range of capabilities
include benefit solutions combined with
administrative services to assist employers in
managing health care costs and
easing plan administration.
United American
Health Net Sales
Compound Annual Growth Rate: 5-Year: 2.7%
($ in millions)
$79
$70
$61
$56
$62
$64
2016
2017
2018
2019
2020
2021
United American
Health Premium
Compound Annual Growth Rate: 5-Year: 6.3%
($ in millions)
$355
$364
$381
$417
$482
$453
2016
2017
2018
2019
2020
2021
9
Investment Operations
We use excess investment income as a measure to evaluate our performance in the
investment segment. Excess investment income is calculated as net investment income
less required interest on net policy liabilities and interest on our debt. Excess investment
income produced 27% of our pretax operating income in 2021.
Components of
Net Operating Income
($ in millions, except per share data)
Underwriting Income
Excess Investment Income
Tax and Other Parent Expenses
Net Operating Income
PER SHARE
$6.46
2.31
(1.91)
$6.86
$666
239
(198)
$707
Excess Investment Income
($ in millions)
Net Investment Income
Required Interest on Net Policy Liabilities
Interest on Debt
Excess Investment Income
$952
(630)
(83)
$239
10
Investment
Portfolio
Due to the types of products we sell and the
strength of our underwriting margins, Globe Life
does not need to invest in high-risk assets such as
derivatives, public equities, residential mortgages,
collateralized loan obligations (CLO), and other
asset-backed securities. We have a conservative
investment philosophy which emphasizes
preservation of capital. We invest primarily in
investment-grade, long-dated fixed maturities which
provide the best match for our long-term fixed
liability products. These assets have historically
provided attractive risk-adjusted, capital-adjusted
returns due in large part to our unique ability to
hold securities to maturity regardless of fluctuations
in interest rates or equity markets. Since we expect
to hold our investments to maturity, we take special
care to invest in entities that have the ability to
survive multiple economic cycles. However, our work
doesn’t end there, as we continue to evaluate the
holdings in our portfolio on an ongoing basis.
Investment Portfolio
December 31, 2021
Invested Assets ($ in millions)
Fixed Maturities (at fair value)
Policy Loans
Other Investments
Total*
AS % OF
TOTAL
94%
2%
4%
$21,305
$590
$863
22,758
100%
*Total invested assets with fixed maturities at amortized cost: $19,258
Total Invested Assets
at Amortized Cost
Compound Annual Growth Rate: 10-Year: 5.4%
($ in billions)
$19.3
$17.3
$15.8
$13.8
$13.0
$11.4
2011
2013
2015
2017
2019
2021
11
Fixed Maturity
Portfolio Yield
Globe Life invests predominately in fixed maturity
securities, (primarily in corporate and municipal bonds)
with longer-term maturities. These assets span a diversified
range of issuers, industry sectors, and geographical
regions. The impact from lower new money yields over
the last 10 years on the fixed maturities portfolio yield is
reflected in the adjacent chart. We are encouraged by the
prospect of higher interest rates. Higher new money rates
will have a positive impact on net operating income by
driving up net investment income. We are not concerned
about potential unrealized losses that are interessst-t-t-rararattet
about potential unrealized losses that are interest rate
drdrivivenen ssinincece wwee wowoululdd nonott exexpepectct ttoo rerealalizizee ththemmmem bbbbecececcauausese
wee havave e ththe intent and abilityy to hold tthem to mmmattatattttuuuruuu itttty.y.
Fixed Maturity Portfolio Yield
(at end of year)
6.49%
5.91%
5.83%
5.60%
5.41%
5.17%
2011
2013
20155
2017
2019
2021
1121212221212121212122212112121121212
Capital Management
Globe Life has maintained a consistent capital
es
management philosophy over the years. Our objective
are to fully fund the insurance operations, keep
appropriate capital levels, and maximize the amountt o
and the return on, excess cash flow.
of,
We continue to manage to a Company Action Level
Risk-Based Capital (RBC) ratio target of 300% to 3200%
%.
rs
This RBC ratio is lower than that of similarly rated peeer
due to the lower risk profile of our business.
We do not need to hold as much capital as
g
our peers because of the strength of our underwritinng
that
profits, consistent cash flow generation, and the facct t
ded
hthe majjo irity off our lili babililiitiies are fifixeedd andd non tt imimpacctctee
by fluctuations in interest rates and equity markets.
We are able to generate substantial excess cash floww
ff
each year because of our large a dnd profifitablble blblockk fof
inin f-fororcece ppololicicieiess.
For 2022, after payments of intere tst on its debt, thee
llion
holding company should have approximately $380 mmil
n
imilllliion av iaillablble to rretetururn n toto iitst sshharehholdlderss ii
to $$383855
the form of dividends and share repurchases. This ammo
ount
99
isis llowowerer tthahann inin 22020211, ppririmaamaririlylyy ddueue ttoo hihighghg erer CCOVOVIDIDDD-1199
iinn
liliffe llosses iincurr ded iin 202021212 aaandndd ttthehe nnneaeaearlrlr y y y 151515%% grgrowowthth
ower
our exclusive agency salalese , bobothth oof f whwhicichh resulted inn lol
hthe
statt tutory income in 2002121, andd ththus llower ddiivididendds tto
holding company in 2022.
Share Repurchases
SSSSSSSShhhhhaaaaarrrrrreeeeeeee Repurchases
TOTAL SPENT
TOTAL SPENT
TOTAL SPENT
NO. OF SHARES
NO. OF SHARES
NO. OF SHARES
(IN MILLIONS)
(IN MILLIONS)
(IN MILLIONS)
(IN 000’S)
(IN 000’S)
(IN 000’S)
AVERAGE
AVERAGE
AVERAGE
PRICE
PRICE
PRICE
$360
$360
11,219
11,219
$32.13
$32.13
360
360
375 375
359359
311311
325 325
372372
350 350
380
380
455 455
8,280
8,280
7,1557,155
6,292
6,292
5,208
5,208
4,126
4,126
4,406
4,406
3,932
3,932
4,459
4,459
4,784
4,784
43.48
43.48
52.42
52.42
56.99
56.99
59.78
59.78
78.67
78.67
84.38
84.38
89.04
89.04
85.24
85.24
95.11
95.11
222200001112222
222000011133332013
222000011144442014
222000011155552015
2222000011166662016
2222000011177772017
222000011188882018
2220000011119999992019
222200002222200002020
2220000202222112021
RRRReeeetttuuuurrrrnnnniinnnnngggg eeeeeexxxxxccccess
Returning excess
capital to shareholders is core to
capital to shareholders is core to
ooouuuurrr bbbbbuuuussssiiinnneeeessssssss mmmmod
our business mod
el. Since the inception of our share
el. Since the inception of our share
rreeeeepppppuuuurrrrcccchhhhaaassseeeee ppppprrrrogra
repurchase progra
am in 1986, we have spent $8.7 billion
am in 1986, we have spent $8.7 billion
to repurchase 82%
ttooooo rrreeeeppppppuuuurrrrccchhhhaaaasssseeee 82%
% of the outstanding shares of the
% of the outstanding shares of the
CCCCCooooommmmmmppppppaaaannnnyyy aaaaannnndddd hav
Company and hav
ve returned approximately 70% of
ve returned approximately 70% of
ooouuuurrr nnnnneeeeetttt innnncccccoooommmmmmme to
o shareholders through dividends and
our net income to
o shareholders through dividends and
share repurchases
sshhhhaaaaarreeeee rrreeeeeeppppuuuurrrcccchhhhhases
s.s.
WWWWWWhhhhiilleeeee wwwwwwwweee bbbbbbbeeeellieeeeve s
While we believe s
ooofff eeeexxxxxcccceeeeessssssss cccccaaaaappppiiiital o
of excess capital o
aaallttteeeerrrnnnnnaaaaaattttiiivvveeeeee uuuusssseeees to
alternative uses to
as efficiently as po
aaassss eeeeeffffffffiicccccieeeeennnttttllyyyy aaaas po
pppprriiiooooorrriitttttyyyy hhhaaaasssss aaaalwwwways
priority has always
ooofff ooooouuuuurrrr iinnnnnsssuuuuurrrraaaannnnce b
of our insurance b
cccoooommmmmeeeee fffrrrooooommmmmmm eeeeexxxxxcess
come from excess
operations have b
oooppppeeeerrraaaattttiiooooonnnnssss hhhaaaavve b
investments in tec
innnnvvvvveeeessssstttmmmmmmmeeeeennnnttttsss iinnnn tec
share repurchases have been the best use
share repurchases have been the best use
over the years, we will continue to review
over the years, we will continue to review
o ensure our excess capital is deployed
o ensure our excess capital is deployed
ossible. It is important to note our first
ossible. It is important to note our first
s been to maximize the profitable growth
s been to maximize the profitable growth
usiness; therefore, share repurchases
usiness; therefore, share repurchases
s cash flow remaining after all insurance
s cash flow remaining after all insurance
een fully funded, including substantial
een fully funded, including substantial
chnology and human capital.
chnology and human capital.
1313
Conclusion
Globe Life continued to thrive in 2021. Despite the
uncharted territory of the past two years, one thing has
not changed. Lower-middle to middle-income working
families in America continue to be largely ignored by the
life insurance industry. This vastly underserved market is
the focus of our business model and provides us a great
opportunity to increase market penetration while providing
much-needed financial protection to these families.
We have always managed our business with a
long-term focus. We believe sustainable business practices
are an important component of both good corporate
citizenship and sound fiscal management. With respect
to sustainability, our primary focus involves meeting
the ongoing needs of our customers, human capital
management, corporate culture and engagement, data
protection and cybersecurity, and environmental efficiency
and climate change.
We continue to advance our sustainable business
practices by further enhancing the Company’s ESG
program and are working towards alignment with the
program and are working towards alignment with the
Sustainability Accounting Standards Board and the
Task Force on Climate-related Financial Disclosures
recommendations.
We stand committed to Make Tomorrow Better:
• For our customers by offering life and supplemental
health products, and enhancing the customer experience
• For our distribution divisions by recruiting agents from
diverse backgrounds and offering a better career
opportunity, and equipping them with tools that are
simple, effective, and adaptable between mobile, virtual,
or in-person methods
• For our employees by maintaining a work environment
that strongly and consistently promotes a culture of
diversity, equity, and inclusion
• For our shareholders by ensuring their investment in
Globe Life results in strong, stable returns
At its core, Globe Life meets the needs of people, whether
through our basic protection products, our opportunities
to experience a life-changing career, or a financially sound
investment. Within the covers of this report, we invite
you to read the stories of our customers, agents, and
employees. These are the stories of Globe Life and how we
Make Tomorrow Better.
When you consider our business model and the market
we serve, we believe you will agree that significant
opportunity lies ahead. We expect Globe Life to
continue to generate shareholder value well into the future.
Thank you for your investment in Globe Life.
Gary L. Coleman
Co-Chairman and
Chief Executive Officer
MMMMM
Larry M. Hutchison
Co-Chairman and
Chief Executive Officer
Note: Globe Life cautions you that this Letter to Shareholders may contain forward-looking statements within the meaning of the federal securities law. These
prospective statements reflect management’s current expectations, but are not guarantees of future performance. Accordingly, please refer to our cautionary
statement regarding forward-looking statements and the business environment in which the Company operates, contained in the Company’s Form 10-K
for the period ended December 31, 2021, found on the following pages and on file with the Securities and Exchange Commission. Globe Life specifically
disclaims any obligation to update or revise any forward-looking statement because of new information, future developments, or otherwise.
1414
DIVIDEND REINVESTMENT
Globe Life maintains a dividend reinvestment
plan for all holders of its common stock. Under
the plan, shareholders may reinvest all or part of
their dividends in additional shares of common
stock and may also make periodic additional cash
payments of up to $3,000 toward the purchase of
Globe Life stock. Participation is voluntary. More
information on the plan may be obtained from the
Stock Transfer Agent by calling toll-free
866-557-8699 or by writing: Globe Life Inc., c/o EQ
Shareowner Services, P.O. Box 64874, St. Paul, MN
55164-0874 or 1110 Centre Pointe Curve, Suite
101, Mendota Heights, MN 55120-4100.
AUTOMATIC DEPOSIT OF DIVIDENDS
Automatic deposit of dividends is available to
shareholders who wish to have their dividends
directly deposited into the financial institution of
their choice. Authorization forms may be obtained
from the Stock Transfer Agent by calling toll-free
866-557-8699.
PRINCIPAL EXECUTIVE OFFICE
3700 South Stonebridge Drive
McKinney, Texas 75070
972-569-4000
ANNUAL MEETING OF SHAREHOLDERS
10:00 a.m. CDT, Thursday, April 28, 2022
The proceedings will be made available for replay
on the Investors page of the Globe Life website.
The Company’s Annual Meeting will be conducted
in accordance with its Shareholders’ Rights Policy.
A copy of this policy can be obtained on the
Company’s website, or by contacting the Corporate
Secretary at the Globe Life principal executive
office address.
INVESTOR RELATIONS
Contact: Mike Majors
Phone: 972-569-3239
Fax: 972-569-3282
Email: Investors@Globe.Life
INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
Deloitte & Touche LLP
2200 Ross Avenue
Suite 1600
Dallas, Texas 75201
STOCK EXCHANGE LISTINGS
New York Stock Exchange Symbol: GL
INDENTURE TRUSTEE FOR 7.875%,
4.550%, 3.800% AND 2.150% SENIOR
NOTES AND 5.275% AND 4.250% JUNIOR
SUBORDINATED DEBENTURES
Regions Bank Corporate Trust Services
3773 Richmond Ave., Suite 1100
Houston, TX 77046-3703
PHONE: 713-244-8042
Website: www.regions.com/commercial_ banking/
corp_trust.rf
The 4.250% debentures trade through Depository
Trust Company under global certificates
listed on the New York Stock Exchange (NYSE
Symbol GL PRD). The 5.275% debentures trade
through Depository Trust Company under
global certificates listed on the Singapore
Stock Exchange.
STOCK TRANSFER AGENT AND
SHAREHOLDER ASSISTANCE
EQ Shareowner Services
P.O. Box 64854
St. Paul, MN 55164-0854
or
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120-4100
Toll-Free Number: 866-557-8699
TDD: Hearing impaired can use a relay service
Outside the U.S.: 651-450-4064
Website: www.shareowneronline.com
Globe Life
Investors Website
The Investors page contains a menu with links
to many topics of interest to investors and
other interested third parties:
• Financial Reports and Other
Financial Information
• Annual Reports, 10-K and Proxy Statements
• Calendar
• News Releases
• SEC Filings
• Environmental, Social & Governance Report
• Political Contributions & Public Advocacy Policy
• Executive Leadership
• About Globe Life Inc.
• Contact Us
• GlobeLifeInsurance.com
STOCK INFORMATION
• Stock Transfer Agent and Shareholder
Assistance
• Dividend Reinvestment
• Automatic Deposit of Dividends
CORPORATE GOVERNANCE
• Corporate By-laws
• Code of Business Conduct and Ethics
• Code of Ethics for CEO and Senior
Financial Officers
• Corporate Governance Guidelines
• Employee Complaint Procedures
• Shareholders’ Rights Policy
• Regulation FD Policy and Guidelines
• Related Party Transaction Policy
• Human Rights and Labor Policy
• Third Party Code of Conduct
• Anti-Bribery and Corruption Policy
BOARD OF DIRECTORS
• Board of Directors
• Board Committees
– Audit Committee
– Compensation Committee
– Governance and Nominating Committee
• Executive Sessions
• Qualifications of Directors
• Director Independence Criteria
• Director Resignation Policy
CALLS AND MEETINGS
• Management Presentations
• Conference Calls on the Web
• Conference Call Replays and Transcripts
• Annual Meeting of Shareholders
15
Operating Summary
Unaudited and $ in thousands except per share amounts
Twelve months ended December 31,
2021
2020
% Increase
or Decrease
UNDERWRITING INCOME
Life:
Premium
Net policy obligations
Nondeferred commissions and amortization
Nondeferred acquisition expense
Underwriting margin
Health:
Premium
Net policy obligations
Nondeferred commissions and amortization
Nondeferred acquisition expense
Underwriting margin
Annuity underwriting margin
Total underwriting margin
Other income
Insurance administration expenses
Underwriting income
EXCESS INVESTMENT INCOME
Net investment income
Required interest on:
Net policy liabilities:
Policy reserves
Deferred acquisition costs
Debt
Total excess investment income
Corporate expenses
Pre-tax operating income
Income tax
Net operating income before stock compensation expense
Stock compensation expense, net of tax
NET OPERATING INCOME
Operating EPS on a diluted basis
Diluted average shares outstanding
Reconciliation of Net Operating Income to Net Income:
Net operating income
Non operating items, net of tax:
Realized gains - investments
Realized gains (losses) - redemption of debt
Administrative settlements
Non-operating expenses
Legal proceedings
NET INCOME
EPS on a diluted basis
8.4
7.6
5.3
11.7
8.2
5.7
2.7
2.4
4.9
4.1
0.3
$2,898,210
(1,335,203)
(853,399)
(85,933)
623,675
1,201,676
(656,171)
(214,373)
(26,830)
304,302
8,704
936,681
1,216
(271,631)
666,266
$2,672,804
(1,111,261)
(808,307)
(78,290)
674,946
1,141,097
(640,006)
(204,617)
(24,105)
272,369
9,029
956,344
1,325
(250,947)
706,722
952,447
927,062
(877,822)
247,389
(83,486)
238,528
(9,553)
)
(
895,241
(169,426)
725,815
(18,318)
$707,497
$6.86
103,170
(833,000)
237,066
(86,704)
244,424
(9,891)
)
(
941,255
(180,321)
760,934
(23,342)
$737,592
$6.88
107,225
$707,497
$737,592
54,220
(7,358)
(1,047)
(1,923)
(6,430)
$744,959
$7.22
(1,915)
(501)
—
(816)
(2,587)
$731,773
$6.82
Note: The Operating Summary has been prepared in the manner Globe Life management uses to evaluate the operating results of the Company.
It differs from the Consolidated Statements of Operations found in the accompanying SEC Form 10-K.
16
Condensed Balance Sheets
Unaudited and $ in thousands except per share amounts
At December 31,
2021
2020
Assets:
Fixed maturities at amortized cost*
Cash and short-term investments
Other investments
Deferred acquisition costs*
Goodwill
Other assets
Total assets*
Liabilities and shareholders’ equity:
Policy liabilities
Current and deferred income taxes payable*
Short-term debt
Long-term debt
Other liabilities
Shareholders’ equity, excluding ASC 320* +
Total liabilities and shareholders’ equity
Actual shares outstanding:
Basic
Diluted
Book value (shareholders’ equity, excluding ASC 320) per diluted share
Net operating income as a return on average equity, excluding ASC 320
Average equity, excluding ASC 320
Debt to capital ratio, excluding ASC 320
Reconciliation of Globe Life management’s view of selected financial items to comparable GAAP measures*:
Shareholders’ equity, excluding ASC 320+
Effect of ASC 320:
Increase fixed maturities
Decrease deferred acquisition costs
Increase current and deferred income taxes payable
Shareholders’ equity
Other comparable GAAP measures:
Fixed maturities at fair value
Deferred acquisition costs
Total assets
Shareholders’ equity
Current and deferred income taxes payable
Book value (shareholders’ equity) per diluted share
Net income as a return on average equity
Average equity
Debt to capital ratio
$17,804,922
161,308
1,383,559
4,919,055
481,791
1,521,375
$26,272,010
$16,612,074
1,030,853
479,644
1,546,494
722,009
5,880,936
$26,272,010
99,567
100,535
58.50
12.3%
$5,743,285
25.6%
$17,193,799
202,629
1,131,360
4,601,399
441,591
1,462,198
$25,032,976
$15,802,739
990,834
254,918
1,667,886
716,373
5,600,226
$25,032,976
103,797
105,429
53.12
13.5%
$5,468,159
25.6%
$5,880,936
$5,600,226
$3,500,365
(4,327)
(734,168)
$8,642,806
$21,305,287
4,914,728
29,768,048
8,642,806
1,765,021
85.97
8.8%
$8,494,262
19.0%
$4,019,710
(5,955)
(842,889)
$8,771,092
$21,213,509
4,595,444
29,046,731
8,771,092
1,833,723
83.19
9.5%
$ 7,731,792
18.0%
*The Condensed Balance Sheets, excluding ASC 320 have been prepared in the manner Globe Life management, industry analysts, rating agencies and financial
institutions use to evaluate the financial position of the company. It differs from the Consolidated Balance Sheets found in the accompanying SEC Form 10-K.
+ASC 320 includes guidance for treatment of unrealized gains and losses on available-for-sale fixed maturities previously included in FAS 115.
17
Directors
CHARLES E. ADAIR
President of Kowaliga Capital
Montgomery, Alabama
LINDA L. ADDISON
Of Counsel, Norton Rose Fulbright US LLP
Houston, Texas
MARILYN A. ALEXANDER
Principal of Alexander and Friedman, LLC
Laguna Beach, California
CHERYL D. ALSTON
Executive Director and Chief Investment Officer of
the Employees’ Retirement Fund of the City of Dallas
Frisco, Texas
MARK A. BLINN
Former President and Chief Executive Officer
of Flowserve Corporation
Dallas, Texas
Officers
GARY L. COLEMAN
Co-Chairman and Chief Executive Officer
LARRY M. HUTCHISON
Co-Chairman and Chief Executive Officer
J. MATTHEW DARDEN
Executive Vice President and Chief Strategy Officer
JENNIFER A. HAWORTH
Executive Vice President and
Chief Marketing Officer
MARY ELIZABETH HENDERSON
Corporate Senior Vice President,
Enterprise Lead Generation
M. SHANE HENRIE
Corporate Senior Vice President and Chief
Accounting Officer
JAMES P. BRANNEN
Retired Chief Executive Officer
of FBL Financial Group, Inc.
Panora, Iowa
JANE BUCHAN
Chief Executive Officer of
Martlet Asset Management LLC
Newport Beach, California
GARY L. COLEMAN
Co-Chairman and Chief Executive Officer
of Globe Life Inc.
LARRY M. HUTCHISON
Co-Chairman and Chief Executive Officer
of Globe Life Inc.
ROBERT W. INGRAM
Retired Ross-Culverhouse Professor of Accounting
in Culverhouse College of Commerce,
University of Alabama
Jupiter, Florida
STEVEN P. JOHNSON
Retired Partner, Deloitte and Touche LLP
Plano, Texas
DARREN M. REBELEZ
President and Chief Executive Officer of
Casey’s General Stores, Inc.
West Des Moines, Iowa
MARY E. THIGPEN
Consultant for Digital Transformation Strategies,
Technology and Cybersecurity Assessments, and
Systemic Risk Mitigation Competencies
Alpharetta, Georgia
ROBERT E. HENSLEY
Executive Vice President and
Chief Investment Officer
THOMAS P. KALMBACH
Executive Vice President and Chief Actuary
MICHAEL C. MAJORS
Executive Vice President, Administration and
Investor Relations
JAMES E. MCPARTLAND
Executive Vice President and
Chief Information Officer
R. BRIAN MITCHELL
Executive Vice President,
General Counsel and Chief Risk Officer
CHRISTOPHER T. MOORE
Corporate Senior Vice President,
Associate Counsel and Corporate Secretary
PAMELA I. RAMIREZ
Corporate Senior Vice President,
Enterprise Transformation
JOEL P. SCARBOROUGH
Corporate Senior Vice President,
Legal and Compliance
DOLORES L. SKARJUNE
Corporate Senior Vice President,
Sales Administration
FRANK M. SVOBODA
Executive Vice President and
Chief Financial Officer
REBECCA E. ZORN
Executive Vice President and
Chief Talent Officer
Distribution Officers
AMERICAN INCOME LIFE DIVISION
FAMILY HERITAGE DIVISION
LIBERTY NATIONAL DIVISION
STEVEN K. GREER
Chief Executive Officer
DAVID S. ZOPHIN
President
18
KENNETH J. MATSON
President and Chief Executive Officer
STEVEN J. DICHIARO
Chief Executive Officer
DIRECT TO CONSUMER DIVISION
UNITED AMERICAN INSURANCE COMPANY
JASON A. HARVEY
President and Chief Executive Officer
MICHAEL C. MAJORS
President
Globe Life Inc. Board of Directors
From left to right: Marilyn A. Alexander, Charles E. Adair, Cheryl D. Alston, Linda L. Addison, Robert W. Ingram,
Gary L. Coleman, Darren M. Rebelez, Larry M. Hutchison, Mark A. Blinn, Mary E. Thigpen, James P. Brannen,
Jane Buchan, Steven P. Johnson
19
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[ ☒ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
[ ☐ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number: 001-08052
GLOBE LIFE INC.
(Exact name of registrant as specified in its charter)
Delaware
63-0780404
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
3700 South Stonebridge Drive, McKinney, TX
(Address of principal executive offices)
ff
75070
(Zip Code)
972-569-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $1.00 par value per share
4.250% Junior Subordinated Debentures
GL
GL PRD
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit such files).
Yes x No ¨
Yes x No ¨
Yes ¨
No x
Yes x No ¨
GL 2021 FORM 10-K
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and "emerging
growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer x
Non-accelerated filer
¨
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.
¨
¨
¨
¨
Indicate by checkmark whether the registrant has filed a report on and attestation to its management's assessment of the
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
effectiveness
x
by the registered public accounting firm that prepared or issued its audit report.
ff
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No x
As of June 30, 2021, the aggregate market value of the registrant’s common stock held by non-affiliates
$9.5 billion based on the closing sale price as reported on the New York Stock Exchange.
ff
of the registrant was
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class
Common Stock, $1.00 par value per share
Outstanding as of February 16, 2022
99,338,401 shares
DOCUMENTS INCORPORATED BY REFERENCE
Document
Proxy Statement for the Annual Meeting of Stockholders to be
held on April 28, 2022 (Proxy Statement)
Parts Into Which Incorporated
Part III
GL 2021 FORM 10-K
PART I.
PART II.
PART III.
PART IV.
Globe Life Inc.
Table of Contents
Page
Business..................................................................................................................................
Item 1.
Item 1A. Risk Factors ............................................................................................................................
Item 1B. Unresolved Staff Cff
omments ................................................................................................
Properties................................................................................................................................
Item 2.
Legal Proceedings .................................................................................................................
Item 3.
Mine Safety Disclosures .......................................................................................................
Item 4.
Item 5.
Item 6.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities............................................................................................
[Reserved]...............................................................................................................................
Cautionary Statements..........................................................................................................
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations...............................................................................................................................
Item 7A. Quantitative and Qualitative Disclosures about Market Risk..........................................
Financial Statements and Supplementary Data................................................................
Item 8.
Consolidated Balance Sheets..............................................................................................
Consolidated Statements of Operations ............................................................................
Consolidated Statements of Comprehensive Income......................................................
Consolidated Statements of Shareholders' Equity ...........................................................
Consolidated Statements of Cash Flows ...........................................................................
Notes to Consolidated Financial Statements ....................................................................
Note 1—Significant Accounting Policies .......................................................................
Note 2—Statutory Accounting.........................................................................................
Note 3—Supplemental Information about Changes to Accumulated Other
Comprehensive Income...................................................................................................
Note 4—Investments........................................................................................................
Note 5—Deferred Acquisition Costs ..............................................................................
Note 6—Commitments and Contingencies...................................................................
Note 7—Liability for Unpaid Claims ...............................................................................
Note 8—Income Taxes.....................................................................................................
Note 9—Postretirement Benefits....................................................................................
Note 10—Supplemental Disclosures of Cash Flow Information ...............................
Note 11—Debt ...................................................................................................................
Note 12—Shareholders' Equity ......................................................................................
Note 13—Stock-Based Compensation..........................................................................
Note 14—Business Segments........................................................................................
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure................................................................................................................................
Item 9A. Controls and Procedures......................................................................................................
Item 9B. Other Information ...................................................................................................................
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ..........................
ff
Item 10. Directors, Executive Officers,
Item 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
and Corporate Governance .............................................
Executive Compensation......................................................................................................
Stockholder Matters...............................................................................................................
Item 13. Certain Relationships and Related Transactions and Director Independence ............
Item 14. Principal Accountant Fees and Services............................................................................
Item 15. Exhibits and Financial Statement Schedules ....................................................................
Signatures ...............................................................................................................................
3
9
16
16
16
16
17
19
20
53
53
56
57
58
59
60
61
61
73
74
76
90
91
94
95
97
103
104
106
107
112
119
119
122
122
122
122
122
123
123
123
134
GL 2021 FORM 10-K
[THIS PAGE INTENTIONALLY LEFT BLANK]
Part I
Item 1. Business
Globe Life and the Company refer to Globe Life Inc., an insurance holding company incorporated in Delaware in
1979, and its subsidiaries and affilff
iates. Its primary subsidiaries are Globe Life And Accident Insurance Company,
American Income Life Insurance Company, Liberty National Life Insurance Company, Family Heritage Life
Insurance Company of America, and United American Insurance Company.
Globe Life's website is: www.globelifeinsurance.com. Globe Life makes available free of charge through its website,
its annual report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments
to those reports as soon as reasonably practicable after they have been electronically filed with or furnished to the
Securities and Exchange Commission. Other informf
ation included in Globe Life's website is not incorporated into
this filing.
1
GL 2021 FORM 10-K
lowing table presents Globe Life's business by primary marketing distribution method. Additional informat
ff
ion
iscussion and Analysis and in Note 14—Business
The folff
concerning industry segments may be found in Management’s D’
Segmentstt within the Notes to the Consolidll ated Financial
FF
Statements.tt
Primary
Distribution
Method
Direct to
Consumer
Division
Underwriting
Company
Products and Target
Markets
Distribution
Globe Life And
Accident Insurance
Company
McKinney, Texas
TT
Individual life and
supplemental health
insurance including
juvenile and senior life
coverage and
Medicare Supplement
to lower middle-
income to middle-
income Americans.
Nationwide
distribution through
direct to consumer
channels: including
direct mail, electronic
media, and insert
media.
American Income
Life Division
American Income
Life Insurance
Company
Waco, Texas
Individual life and
supplemental health
insurance marketed to
working families.
9,415 producing
agents in the U.S.,
Canada, and New
Zealand.
Liberty National
Division
Liberty National Life
Insurance Company
McKinney, Texas
TT
Family Heritage
Division
Family Heritage Life
Insurance Company
of America
Cleveland, Ohio
United American
Division
United American
Insurance Company
McKinney, Texas
TT
2,804 producing
agents in the U.S.
1,157 producing
agents in the U.S.
3,716 independent
producing agents in
the U.S.
Life and supplemental
health insurance
distributed through in-
home and worksite
channels.
Supplemental limited-
benefit health
insurance to lower
middle-income to
middle-income
families.
Medicare Supplement
coverage to Medicare
beneficiaries and, to a
lesser extent,
supplemental limited-
benefit health
coverage to people
under age 65.
2
GL 2021 FORM 10-K
Life Insurance
Insurance
The distribution channels for life insurance products include direct to consumer, exclusive agents, and independent
agents. These methods are described in greater detail within the primary marketing distribution channel chart as
seen above. The following table presents annualized premium in force for the three years ended December 31,
2021 by distribution method:
Annualized Premium in Force(1)
(Dollar amounts in thousands)
2021
2020
2019
Direct to Consumer ....................................................................................................... $
929,197
$
881,012
$
831,739
Exclusive agents:
American Income .........................................................................................................
1,458,408
1,325,293
1,220,483
Liberty National.............................................................................................................
341,332
318,545
309,792
Independent agents:
United American .............................................................................................................
8,426
Other.................................................................................................................................
205,822
9,314
205,785
10,211
209,403
$ 2,943,185
$ 2,739,949
$ 2,581,628
(1) See definition of annualized premium in forff ce under Results of Operations in Management's Discussion & Analysis.
Globe Life's insurance subsidiaries write a variety of nonparticipating ordinary life insurance products. These include
traditional whole life, term life, and other life insurance. The Company does not currently sell
interest-sensitive
whole life products. The following tables present selected information about Globe Life's life insurance products.
Annualized Premium in Force
(Dollar amounts in thousands)
2021
2020
2019
Amount
% of
Total
Amount
% of
Total
Amount
% of
Total
Whole life:
Traditional ................................................................. $ 2,011,349
68
$ 1,857,106
68
$ 1,737,794
Interest-sensitive .....................................................
Term ..............................................................................
Other .............................................................................
33,912
750,005
147,919
1
26
5
36,297
716,698
129,848
1
26
5
38,691
683,869
121,274
67
2
26
5
$ 2,943,185
100
$ 2,739,949
100
$ 2,581,628
100
Policy Count and Average Face Amount Per Policy
(Dollar amounts in thousands)
2021
2020
2019
Average
Face
Amount per
Policy
Policy
Count
Average
Face
Amount per
Policy
Policy
Count
Average
Face
Amount per
Policy
Policy
Count
Whole life:
Traditional......................................
8,963,774
$
Interest-sensitive..........................
191,536
Term ...................................................
4,731,044
Other ..................................................
432,372
14,318,726
$
15.3
20.4
15.3
15.3
15.3
8,717,785
$
199,975
4,526,172
408,859
13,852,791
$
14.7
20.3
15.1
14.3
14.9
8,477,406
$
208,822
4,313,709
399,365
13,399,302
$
14.2
20.3
14.8
13.7
14.5
3
GL 2021 FORM 10-K
Health Insurance
The following table presents Globe Life's health insurance annualized premium in force for the three years ended
December 31, 2021 by distribution channel.
Annualized Premium in Force
(Dollar amounts in thousands)
2021
2020
2019
Direct to Consumer ....................................................................................................... $
74,627
$
77,522
$
78,229
Exclusive agents:
Liberty National...............................................................................................................
American Income ...........................................................................................................
Family Heritage...............................................................................................................
196,783
111,102
363,226
196,534
104,701
338,309
197,163
96,447
312,479
Independent agents:
United American .............................................................................................................
540,340
476,296
454,720
$ 1,286,078
$ 1,193,362
$ 1,139,038
Globe Life offers Medicare Supplement and limited-benefit supplemental health insurance products that include
illness and accident plans. These products are designed to supplement health coverage that
primarily critical
applicants already own. Medicare Supplements are offered
Medicare
program. Medicare Supplement plans are standardized by federal regulation and are designed to pay deductibles
and co-payments not paid by Medicare.
to enrollees in the traditional fee-for-service
ff
ff
The following table presents supplemental health annualized premium in force informat
December 31, 2021 by product category.
ff
ion for the three years ended
Annualized Premium in Force
(Dollar amounts in thousands)
2021
2020
2019
Limited-benefit plans..................................................... $
700,767
Medicare Supplement...................................................
585,311
Amount
% of
Total
54
46
Amount
$
617,759
575,603
% of
Total
52
48
Amount
$
581,056
557,982
$ 1,286,078
100
$ 1,193,362
100
$ 1,139,038
% of
Total
51
49
100
Annuities
Annuity products include single-premium and flexible-premium deferred annuities. Annuities in each of the three
years ended December 31, 2021, comprised less than 1% of premium. The Company does not currently market
annuity products.
Pricing
Premium rates for life and health insurance products are established using assumptions as to future mortality,
morbidity, persistency, investment income, expenses, and target profit margins. These assumptions are based on
Company experience and projected investment earnings rates. Revenues for individual life and health insurance
products are primarily derived from premium income, and, to a lesser extent, through policy charges to the
policyholder account values on annuity products and certain individual life products. Profitability is affected by actual
experience deviations from the established assumptions and to the extent investment income varies from that
required for policy reserves.
Collections for annuity products and certain life products are not recognized as revenues, but are added to
policyholder account values. Revenues from these products are derived from charges to the account balances for
insurance risk and administrative costs. Profits are earned to the extent these revenues exceed actual costs. Profits
are also earned from investment income in excess of the amounts required for policy reserves.
4
GL 2021 FORM 10-K
Underwri
rr
ting
The underwriting standards of each Globe Life insurance subsidiary are established by management. Each
subsidiary uses informat
ion obtained from the application and, in some cases, telephone interviews with applicants,
including, but not limited to inspection reports, pharmacy data, motor vehicle records, responses to both medical
and not medical questions, doctors’ statements and/or medical examinations to determine whether a policy should
ed.
be issued in accordance with the application, with a diffeff
rent rating, with a rider, with reduced coverage, or reject
e
ff
Reserves
insurance policy reserves reflected in Globe Life's consolidated financial statements as future policy benefits
The lifef
are calculated based on accounting principles generally accepted in the United States of America (GAAPAA ). These
reserves, with future premiums and the associated interest compounded at assumed rates, must be suffiff cient to
cover policy and contract obligations as they mature. Generally, the mortality and persistency assumptions used in
the calculations of reserves are based on Company experience. Similar reserves are held on most of the health
insurance policies written by Globe Life's insurance subsidiaries, since these policies generally are issued on a
guaranteed-renewable basis. The assumptions used in the calculation of Globe Life's reserves are reported in Note
1—Significant
the
policyholders’ account values and are increased by policyholder deposits and interest credited and are decreased
by policy charges and benefit payments.
Policies. Reserves for annuity products and certain life products consist of
Accountingtt
ff
Reinsurance
Globe Life has historically participated in very limited third-party reinsurance as a result of the low face amounts of
the policies sold by the Company. See Schedule IV and Note 6—Commitment
s for more
informat
stt and Contingencie
ion.
ff
tt
tt
Investments
The nature, quality, and percentage mix of insurance company investments are regulated by state laws. The
investments of Globe Life insurance subsidiaries consist predominantly of high-quality, investment-grade securities.
Approximately 94% of our invested assets, at fair value, are fixed maturities at December 31, 2021 (see Note 4—
Investments and Management’s Discussion
and Analysis).
ii
Competition
Globe Life competes with other insurance carriers through policyholder service, price, product design, and sales
effort
s. While there are insurance companies competing with Globe Life, no individual company dominates any of
ff
Globe Life's lifef or health insurance markets.
Globe Life's health insurance products compete with, in addition to the products of other health insurance carriers,
health maintenance organizations, preferred provider organizations, and other health care-related institutions which
provide medical benefits based on contractual agreements.
ff
ively competes with other carriers, in part, due to its ability to operate at lower policy acquisition
The Company effect
and administrative expense levels than peer companies. This allows Globe Life to have competitive rates while
maintaining higher underwriting margins.
Regulation
Insurance—Insurance companies are subject to regulation and supervision in the states in which they do business.
The laws of the various states establish agencies with broad administrative and supervisory powers which include,
among other things, granting and revoking licenses to transact business, regulating trade practices, licensing
agents, approving policy forms, approving certain premium rates, setting minimum reserve and loss ratio
requirements, determining the form and content of required financial statements, and prescribing the type and
amount of investments permitted. Insurance companies are also required to file detailed annual reports with
supervisory agencies, and records of their business are subject to examination at any time. Under the rules of the
5
GL 2021 FORM 10-K
National Association of Insurance Commissioners (NAIC), insurance companies are examined periodically by one
or more of the supervisory agencies.
Risk-Based Capital (RBC)—The NAIC requires that a risk-based capital formula be applied to all life and health
insurers. The risk-based capital formula is a threshold formula rather than a target capital formula. It is designed
only to identify companies that require regulatory attention and is not to be used to rate or rank companies that are
adequately capitalized. All Globe Life's insurance subsidiaries are more than adequately capitalized under the risk-
based capital formula. See further discussion of RBC in Capitaltt Resources.
yy
Holdindd g Company—Sta
tes have enacted legislation requiring registration and periodic reporting by insurance
companies domiciled within their respective jurisdictions that control or are controlled by other corporations so as to
constitute a holding company system. Globe Life and its subsidiaries have registered as a holding company system
pursuant to such legislation in Indiana, Nebraska, Ohio, and New York.
Insurance holding company system statutes and regulations impose various limitations on investments in
subsidiaries, and may require prior regulatory approval for material transactions between insurers and affiliat
es and
for the payment of certain dividends and other distributions.
ff
Environmental, Social, and Governance (ESG)
Globe Life’s sustainable business practices are a driver of the success and longevity that our Company has
experienced since its origin. We plan to advance our sustainable business practices by further developing the
Company's ESG strategy and disclosures and intend to align with the Sustainability Accounting Standards Board
(SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
ff
Environmental responsibility and sustainability are key components of our overall corporate responsibility efforts.
We strive to reduce our impact on the environment by implementing numerous green building initiatives at our
corporate facilities, placing a company-wide emphasis on recycling and reducing waste generally, and focusing on
efforts
to reduce the use of paper and water. With respect to social matters, our focus continues to be on supporting
a culture that is inclusive and attractive for all of our employees and independent sales agents. We are committed to
that reflects the communities in which we work. In addition, to enable the Company
maintaining a diverse workforce
the Company has in place an ESG
to appropriately respond to ESG-related challenges and opportunities,
Committee, and the Board and its committees regularly engage with senior management on relevant ESG-related
issues.
ff
ff
Human Capital Management
ff
ff
ly and effecti
Globe Life's talent base encompasses a broad range of experience that possesses the depth of critical skills to
efficient
vely accomplish our business purpose and mission, serve our policyholders, and protect our
shareholders' interests. Maintaining superior human capital is a key driver to the success and longevity that our
Company has experienced since its origins dating back to the early 1900s. As of December 31, 2021, the Company
had 3,222 full time, part-time, and temporary employees. In 2021, our employee headcount decreased by 1% due to
normal attrition. The Company engages over 13,000 independently-contracted insurance agents. Refer
to
Management's Discussion & Analysis for exclusive agent counts.
People, Culture, and Communityt
At Globe Life, we are united by our mission to—Make Tomorrow Better1 and this starts with our employees and
agents. Beyond providing insurance protection for millions of individuals, serving our policyholders and generating
financial results forf
our shareholders, we focus on cultivating a healthy, positive culture and a thriving community
within and among our campuses that is inclusive of and attractive for all. Globe Life promotes a diverse work force,
where differences
are celebrated and inclusiveness is embraced, to better enable our employees to consistently
ff
achieve outstanding individual and collective results. Our commitment to diversity starts at the top; of the 11
independent Board members, 45% are women and 18% are racial/ethnic minorities.
1Per the Globe Life Employee Handbook, the Globe Life mission statement is "We help families Make Tk
TT
their financial future."
omor
rowrr
6
Better by working to protect
GL 2021 FORM 10-K
As of December 31, 2021 and 2020, the Globe Life employees, (excluding independently-contracted agents)
identify as follows:
Ethnicity/Race
2021
Gender
Generations
White......................................................................
56 % Female ..............
66 % Baby Boomers (1946-1964) .............
20 %
Black or African American ..................................
Hispanic or Latino................................................
Asian......................................................................
American Indian or Alaskan Native...................
21
12
9
1
Native Hawaiian or Pacific Islander .................. —
Other or Not Specified ........................................
1
Male...................
34
Gen X (1965-1977)............................
Millennials (1978-1995).....................
Gen Z (1996-2012) ............................
31
41
8
Total
100 %
100 %
100 %
Ethnicity/Race
2020
Gender
Generations
White......................................................................
53 % Female ..............
67 % Baby Boomers (1946-1964) .............
23 %
Black or African American ..................................
Hispanic or Latino................................................
Asian......................................................................
American Indian or Alaskan Native...................
21
11
9
1
Native Hawaiian or Pacific Islander .................. —
Other or Not Specified ........................................
5
Male...................
33
Gen X (1965-1977)............................
Millennials (1978-1995).....................
Gen Z (1996-2012) ............................
31
41
5
Total
100 %
100 %
100 %
We conduct a confidential survey biennially to give our employees the opportunity to provide candid feedback about
limited to, confidence in the Company and leadership,
their experiences at
competitiveness of our compensation and benefit package, and departmental relationships. The results are shared
with our employees, reviewed by senior leadership, and used to identify aff
reas for improvement and create action
plans based on the employee feedback received.
including but not
the Company,
We strive to Make Tomorrow Better, in part by giving financial and service contributions to programs that provide
hands-on assistance in the communities where we live, work, serve, and visit. We focus
our charitable giving on
organizations that support children, families, veterans, and seniors, as well as those that work to ensure people are
able to live full, healthy lives. These categories align with our mission to help families make tomorrow better by
working to protect their financial future. In 2021, we provided financial support of approximately $2.6 million to
organizations within that focuf
s, including charities that support underserved communities, provide scholarships to
youth, and advance equity and diversity efforts.
ff
ff
Talent Development
At Globe Life, we believe investing in our employees through training and development is paramount to their
includes a multitude of professional development
success. We have developed a learning ecosystem that
ed, and instructor-led courses on a variety of
opportunities,
topics. An education
ate growth in an area related to one's current position with the Company.
assistance program is also offere
including online, self-direct
f
d to facilit
ff
ff
7
GL 2021 FORM 10-K
Health,tt Safety,t and Wellness
We strive to provide a safe and healthy work environment
for every employee. We furnish employees with
numerous tools and trainings throughout the year to help ensure they have, at their fingertips, the best information
to safely engage with co-workers, customers, and third parties. In furtherance of our commitment to our employees,
we offer
a comprehensive employee benefits package that includes competitive monetary benefits, retirement
benefits through a Section 401(k) plan and a qualified pension to eligible employees, fitness center reimbursement,
paid-time-offff
(based on years of service), health insurance, dental and vision insurance, employee resource
program, health savings and flexible spending accounts, family leave, and tuition assistance.
ff
The Company remains committed to the well-being and safety of its employees, agents, customers, guests,
vendors, and shareholders in our resolve to maintain a stable and secure business environment. In response to the
COVID-19 pandemic, our crisis management and incident response teams guided the Company through an
expedited, yet smooth, transition towards working remotely. We efficient
ly transitioned approximately 80-85% of the
excluding agents, to working remotely and continued to operate in a mostly remote
Company's total workforce,
capacity throughout 2021, allowing individuals to return to our campuses on a limited and voluntary basis. As we
transition out of our pandemic response phase, we will continue to provide our employees flexible workplace options
and flexible schedule opportunities, as appropriate by the department and role requirements. The Company
successfully transitioned most sales and recruiting of agents to a virtual experience in 2020. Agency operations
mostly remained a virtual experience during 2021, providing limited occurrences of in-person exposure. The agency
operations will continue to offer
both virtual and in-person experiences.
ff
ff
ff
8
GL 2021 FORM 10-K
Item 1A. Risk Factors
Risks Related to Our Business
The insurance industry is a regulated industry, populated by many public and private companies. We operate in the
industry's life and health insurance sectors, each of which has its own set of risks.
Business and Operational Risks
The develovv
sales and profrr
itff s.tt
pment and maintenance of our various distri
ii
buii
tion channels are critical to growth
rr
in product
Recruiting, development, and retention of producing agents are critical to support sales growth in our agency
operations because our insurance sales are primarily made to individuals, and the face amounts of
the life
insurance policies sold are typically lower than those of policies sold in higher-income markets. If we do not provide
an attractive career opportunity with competitive compensation and that motivates producing agents to increase
sales of our products, our growth could be impeded. In addition, a failure to effect
ively develop new methods of
reaching consumers and realizing cost efficiencies
in our Direct to Consumer Division business could result in
ff
reduced sales and profits.
ff
Our future success depends, in substantial part, on our ability to recruit, hire, motivate, develop and retain highly-
lt due to many factors, including but not limited to, fluctuations
skilled insurance personnel. Doing so may be difficuff
in economic and industry conditions and the effecti
veness of our compensation programs and competition among
other employers.
ff
Our life insuranc
rr
ii
e prodrr ucts arerr sold in niche markrr ekk ts. We arerr at risk should any of these markets dimini
sh.
ii
We have several life distribution channels that focus on distinct market niches, three of which are labor unions,
ity groups, and sales via Direct to Consumer solicitations. Deterioration of our relationships with organized labor
affinff
or adverse changes in the public’s receptivity to direct to consumer marketing initiatives could negatively affect
our
life insurance business.
ff
The impact of COVID-VV 19 and related risks could materiall
and/or liquidity.t
ii yl affect our results of operations, financial position
ts of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive
The effecff
and rapidly changing. The global COVID-19 pandemic has resulted in and is expected to continue to result in
significant disruptions in economic activity and financial markets. COVID-19 has directly and indirectly adversely
affect
ed the Company and will likely continue to do so for an uncertain period of time. Because of the size and
breadth of this pandemic and the impact of related government and regulatory actions, all of the direct and indirect
consequences of COVID-19 on the Company are not yet known and may not emerge for some time.
ff
The COVID-19 pandemic subjects the Company to various potential risks that could adversely affect
ff
in differe
nt ways, including but not limited to the following:
ff
the Company
•
•
•
•
limitations in the virtual sales and agent recruiting process or
Reduced sales resulting from potential
reductions in the willingness or ability of consumers to purchase our products;
Reduced cash flows from lower premiums, higher surrenders and greater than anticipated claim payments;
Disruptions, delays, and increased costs and risks related to employees working remotely, having limited or
no access to our facilities, and experiencing reductions or interruptions of critical or essential services;
Ratings downgrades, increased bankruptcies and credit spread widening in industries in which we invest in
our investment portfolio.
ff
For the year ended December 31, 2021, we recorded approximately $140 million of COVID-19 life claims. This
amount includes certain estimates, utilizing accepted actuarial practices, of what management expects the ultimate
settlement and claims administration will cost for claims that have occurred by the end of the year, whether known
ion
or unknown. Given the great uncertainties associated with COVID-19 and its impact and the limited informat
ff
9
GL 2021 FORM 10-K
upon which our current assumptions and assessments have been made, our reserves and the underlying estimated
level of claim losses and costs arising from COVID-19 may materially change.
Actual or alleged misclassification of independentdd
vv
adverse
cial consequences.
legal, tax or finanii
contractors at our insurance subsidiaridd
es could result in
A significant portion of our sales agents are independent contractors. Although we believe we have properly
classified such individuals, a risk nevertheless exists that a court, the Internal Revenue Service or other authority
will take the position that those sales agents are employees. The laws and regulations that govern the status and
classification of workers are subject to change and differi
ng interpretations, which we cannot predict.
ff
If there is an adverse determination regarding the classification of some or all of the independent contractors at our
insurance subsidiaries by a court or governmental agency, we could incur significant costs with respect to payroll
tax liabilities, employee benefits, wage payments, fines, judgments and/or legal settlements, any of which could
on our business, financial condition and results of operations. In addition, any
have a material adverse effect
resulting reclassification could necessitate significant changes in our affect
ed insurance subsidiaries’ business
ff
models.
ff
Financial and Strategic Risks
Our investments are subjecb
in our investment portfolio
and unrearr
lized invesvv
tt
tment losses.
t to market and creditdd risks. Significff ant downgrades
could potentiatt
lly result in lower net invesvv
ts
tment income and increased realizll ed
ncies and defdd aul
ll
, delinque
rr
ff
individual
Our invested assets are subject to the customary risks of defaults, downgrades and changes in market values. Our
consists predominately of fixed maturity and short-term investments, where we are exposed to
investment portfolioff
the risk that
issuers will not have the ability to make required interest or principal payments. A
concentration of these investments in any particular issuer, industry, group of related industries or geographic areas
could increase this risk. Factors that may affect
both market and credit risks include interest rate levels (consisting
of both treasury rate and credit spread), financial market performance, disruptions in credit markets, general
economic conditions, legislative changes, particular circumstances affect
ing the businesses or industries of each
issuer and other factors beyond our control.
ff
ff
Additionally, as the majority of our investments are long-term fixed maturities that we typically hold until maturity, a
significant increase in interest rates or a market downturn could cause a material temporary decline in the fair value
assets. These declines could cause a material
ff
of our fixed investment portfolio,
increase in unrealized losses in our investment portfolio.
Significant unrealized losses could substantially reduce our
capital position and shareholders’ equity. It is possible our investment in certain of these securities with unrealized
losses could experience a credit event where an allowance for credit loss is recorded, reducing net income.
even with regard to performing
ff
ff
We cannot be assured that any particular issuer, regardless of industry, will be able to make required interest and
principal payments on a timely basis or at all. Significant downgrades or defaults of issuers could negatively impact
our risk-based capital ratios,
the Company by rating agencies, potential
reduction in future dividend capacity from our insurance subsidiaries, and/or higher financing costs at the Parent
Company should additional statutory capital be required.
leading to potential downgrades of
Changes in interest rates could negatively affect income.
Declines in interest rates expose insurance companies to the risk that they will fail to earn the level of interest on
investments assumed in pricing products and in setting discount rates used to calculate net policy liabilities, which
could have a negative impact on income. Significant decreases in interest rates could result in calls by issuers of
investments, where such features are available to issuers. Any such calls could result in a decline in our investment
income, as reinvestment of the proceeds would likely be at lower interest rates.
An increase in interest rates could result in certain policyholders surrendering their life or annuity policies for cash,
thereby potentially requiring our insurance subsidiaries to liquidate invested assets if other sources of liquidity are
not available to meet their obligations. In such a case, realized losses could result from the sale of the invested
assets and could adversely affect
our statutory income, required capital levels, and results of operations.
ff
10
GL 2021 FORM 10-K
Our abilityt
.
subsidiardd iesrr
to fund operation
rr
s is substantiallyll
dependentdd
on availabl
ii
e funds from our insurance
As a holding company with no direct operations, our principal asset
is the capital stock of our insurance
subsidiaries, which periodically declare and distribute dividends on their capital stock. Moreover, our liquidity,
including our ability to pay our operating expenses and to make principal and interest payments on debt securities
or other indebtedness owed by us, as well as our ability to pay dividends on our common stock or any preferred
stock, depends significantly upon the surplus and earnings of our insurance subsidiaries and the ability of these
subsidiaries to pay dividends or to advance or repay funds to us. Other sources of liquidity include a variety of short-
term and long-term instruments, including our credit facility, commercial paper, long-term debt, Federal Home Loan
Bank,(FHLB) intercompany financing and reinsurance.
The principal sources of our insurance subsidiaries’ liquidity are insurance premiums, as well as investment income,
maturities, repayments and other cash flow from our investment portfolio.
Our insurance subsidiaries are subject to
various state statutory and regulatory restrictions applicable to insurance companies that limit the amount of cash
dividends, loans and advances that those subsidiaries may pay to us, including laws establishing minimum solvency
and liquidity thresholds. For example, in the states where our companies are domiciled, an insurance company
generally may pay dividends only out of its unassigned surplus as reflected in its statutory financial statements filed
in that state. Additionally, dividends paid by insurance subsidiaries are restricted based on regulations by their
states of domicile. Accordingly, impairments in assets or disruptions in our insurance subsidiaries’ operations that
reduce their capital or cash flow could limit or disallow the payment of dividends, a principal source of our cash flow,
to us.
ff
Changes in laws or regulations in the states in which our companies are domiciled could constrain the ability of our
insurance subsidiaries to pay dividends or to advance or repay funds to us in suffiff cient amounts and at times
necessary to pay our debt obligations, corporate expenses, or dividends on our capital stock.
Adverse capital and credrr
access capital, as well as affeff ct our cost of capital.
itdd market conditions may significantlyl affect our abilityll
to meet liquidityt needs or
Should interest rates increase in the future, the higher interest expense on any new issued debt may reduce net
income. In addition, if the credit and capital markets were to experience significant disruption, uncertainty and
instability, these conditions could adversely affect
our access to capital. Such market conditions could limit our
ability to replace maturing debt obligations in a timely manner or at all and/or access the capital necessary to grow
our business.
ff
In the unlikely event that current sources of liquidity do not satisfy our needs, we may have to seek additional
financing or raise capital. The availability and cost of additional financing or capital depend on a variety of factors
such as market conditions, the general availability of credit or capital, the volume of trading activities, the overall
availability of credit to the insurance industry and our credit ratings and credit capacity. Additionally, customers,
lenders or investors could develop a negative perception of our financial prospects if we were to incur large
investment losses or if the level of our business activity decreased due to a market downturn. Our access to funds
may also be impaired if regulatory authorities or rating agencies take negative actions against us. If our internal
sources of liquidity prove to be insuffici
ent, we may not be able to successfully obtain additional financing on
favorable terms or at all. As such, we may be forced to delay raising capital, issue shorter term securities than we
would preferf
or bear an unattractive cost of capital which could decrease our profitability and significantly reduce our
financial flexibility. If so, our results of operations, financial condition, consolidated RBC, and cash flows could be
materially negatively affect
ed.
ff
ff
Industry Risks
Variations in actual-to-expected rates of mortali
affect our results of operations and finanii
cial condition.
rr
ty, morbirr dity and persisten
ii
cy could materiallyii
negatively
We establish policy reserves to pay future policyholder benefits. These reserves do not represent an exact
calculation of liability, but rather are actuarial estimates based on models and accounting requirements that include
many assumptions and projections which are inherently uncertain. The reserve computations involve the exercise of
significant judgment with respect to investment yields, levels of mortality, morbidity, persistency, and investment
11
GL 2021 FORM 10-K
yields, as well as the timing of premium and benefit payments. Even though our actuaries continually test actual-to-
significantly from the levels assumed, which could result in increased
expected results, actual results may differ
policy obligations and expenses and thus negatively affect
our profit margins and income.
ff
ff
A ratingii
financial conditidd on and results of operations.
s downgrade or other negativevv action by a ratingii
agency could materially affect our business,
Various rating agencies review the financial performance and condition of
including our insurance
subsidiaries, and publish their financial strength ratings as indicators of an insurer’s ability to fulfill its contractual
obligations. These ratings are important to maintaining public confidence in our insurance products. A downgrade or
other negative action by a rating agency with respect to the financial strength ratings of our insurance subsidiaries
us by limiting or restricting the ability of our insurance subsidiaries to pay dividends to us and
could negatively affect
reducing our sales by adversely affect
insurance products through independent insurance
agencies.
ing our ability to sell
insurers,
ff
ff
The supplementaltt health insurance market is subject to substantial regulatory
ll
scrutiny.
Regulatory changes could impact our Medicare Supplement and other supplemental health business. The nature
on our supplemental
and timing of any such changes cannot be predicted and could have a material adverse effect
health insurance business.
ff
Obtainingii
al.
is criticrr
timeii
ly and appropriate prerr mium rate increases for certaitt nii supplementaltt healthtt
insurance policies
A significant percentage of the supplemental health insurance premiums that our insurance subsidiaries earn is from
Medicare Supplement insurance. Medicare Supplement insurance, including conditions under which the premiums
for such policies may be increased, is highly regulated at both the state and federal level. As a result, our Medicare
Supplement business is characterized by lower profit margins than life insurance and requires strict administrative
discipline and economies of scale for success. Since Medicare Supplement policies are coordinated with the federal
Medicare program, which experiences health care inflation every year, annual premium rate increases for the
Medicare Supplement policies are typically necessary. Accordingly, the inability of our insurance subsidiaries to
obtain approval of appropriate premium rate increases for supplemental health insurance plans in a timely manner
from state insurance regulatory authorities could adversely impact their profitability and thus our business, financial
condition and results of operations.
Our business is subject to the risk of the occurrence of catastrophic events that could adverselyl affect our
financial conditidd on or operatiorr
ns.
Our insurance policies are issued to and held by a large number of policyholders throughout the United States in
relatively low-face amounts. Accordingly, it is unlikely that a large portion of our policyholder base would be affecte
d
by a single natural disaster. However, our insurance operations could be exposed to the risk of catastrophic
mortality or morbidity caused by events such as a pandemic, hurricane, earthquake, or man-made catastrophes,
including acts of terrorism or war, which may produce significant claims in larger areas, especially those that are
heavily populated. Claims resulting from natural or man-made catastrophic events could cause substantial volatility
in our financial results for any fiscal quarter or year and could materially reduce our profitability or harm our financial
condition.
ff
Our life and health insurance products are particularly exposed to risks of catastrophic mortality, such as a
pandemic or other events that result in a large number of deaths. In addition, the occurrence of such an event in a
concentrated geographic area could have a severe disruptive effect
and business operations. The
likelihood and severity of such events cannot be predicted and are difficult
to estimate. In such an event, the impact
to our operations could have a material adverse impact on our ability to conduct business and on our results of
operations tasks and
operations and financial condition, particularly if those problems affect
supporting computer-based data processing, or destroy the capability to transmit, store, and retrieve valuable data.
In addition, in the event that a significant number of our management were unavailable following a disaster, our
strategic plan could be negatively impacted.
on our workforce
ff
employees performing
ff
ff
ff
ff
12
GL 2021 FORM 10-K
Our business is subjeb ct to the riskii
of dirdd ecrr
t or indirecrr
t effeff ctstt of climll
ate change.
Climate change may increase the frequency and severity of weather-related natural disasters and pandemics, which
may adversely impact our mortality and morbidity rates and disrupt our business operations. In addition, climate
change and climate change regulation may affect
the prospects of companies and other entities whose securities
we hold, or our willingness to continue to hold their securities. Climate change may also influence investor
sentiment with respect to the Company and investments in our portfolio. We cannot predict how legal, regulatory
and social responses to concerns around climate change may impact our business.
ff
Legal, Regulatory, and Compliance Risks
Our busines
ii
ses are heavilyl
regulated and changes in regulation may reduce our profi
rr
tabilityll
and grorr wth.
Insurance companies, including our insurance subsidiaries, are subject to extensive supervision and regulation in
the states in which they do business. The primary purpose of this supervision and regulation is the protection of
policyholders, not investors. Regulatory agencies have broad administrative power over numerous aspects of our
business, including premium rates and other terms and conditions included in the insurance policies offered
by our
insurance subsidiaries, marketing practices, advertising, agent licensing, policy forms, capital adequacy, solvency,
reserves and permitted investments. Also, regulatory authorities have relatively broad discretion to grant, renew or
revoke licenses or approvals. The insurance laws, regulations and policies currently affect
ing our companies may
change at any time, possibly having an adverse effect
on our business. Should regulatory changes occur, we may
be unable to maintain all required licenses and approvals, or fully comply with the wide variety of applicable laws
and regulations or the relevant authority’s interpretation of such laws and regulations. If we do not have the requisite
the insurance regulatory
licenses and approvals or do not comply with applicable regulatory requirements,
authorities could preclude or temporarily suspend some or all of our business activities and/or impose substantial
fines.
ff
ff
ff
Changes in U.S. federalrr
subsidiaridd
es' capital.
income tax law could increase our tax costs or negativelyl
impact our insurance
ng the insurance industry,
Changes to the Internal Revenue Code, administrative rulings, or court decisions affecti
ive tax rate and lower our net income, adversely
including the products insurers offer
impact our insurance subsidiaries' capital, or limit the ability of our insurance subsidiaries to sell certain of their
products.
, could increase our effect
ff
ff
ff
Changes in accounting standardsdd issued by accounting standard-setti
stattt ements,tt
litii yt and change thett
reduce our repor
dd
ii
timing
terr d profitff abi
ngii
of profitff
e
tt
bodiesdd
recognition.
may affeff ct our finanii
tt
cial
Our financial statements are subject to the application of GAAPAA
and accounting practices as promulgated by the
National Association of Insurance Commissioners’ statutory accounting practices (NAIC SAP), which principles are
periodically revised and/or expanded. Accordingly, from time to time we are required to adopt new or revised
accounting standards or guidance issued by recognized authoritative bodies. Future accounting standards that we
are required to adopt could change the current accounting treatment that we apply to our consolidated financial
statements. These changes including underlying assumptions, projections, estimates or judgments/interpretations
on our business, financial condition and results of operations.
by management, could have a material adverse effect
(Refer to Note 1— Significant
to be
ff
Adopted)
Policies under the caption Accountinii g Pronrr
ouncements Yet
Accountingtt
ff
e with laws or regulation
ll
including a failurerr
Non-complianc
securitrr y,t
consumer information maintain its confidentiality
business operations.
ationtt
to ensure that our business associates with access to sensitivevv customer and
adversely affect our reputation and
to customer and consumer privacy and informff
,yy could materiallyii
ll
s related
ll
ii
The collection, maintenance, use, disclosure and disposal of personally identifiable informat
ion by our insurance
subsidiaries are regulated at the international, federal and state levels. Applicable laws and rules are subject to
change by legislation or administrative or judicial interpretation. Various state laws address the use and disclosure
of personally identifiable informat
ion to the extent they are more restrictive than those contained in the privacy and
security provisions in the federal Gramm-Leach-Bliley Act of 1999 (GLBA), the Health Information Technology for
ff
ff
13
GL 2021 FORM 10-K
Economic and Clinical Health Act (HITECH), and in the Health Insurance Portability and Accountability Act of 1996
also requires that we impose privacy and security requirements on our business associates (as that
(HIPAAPP ). HIPAAPP
term is defined in the HIPAAAA regulations). Noncompliance with any privacy laws, whether by us or by one of our
business associates, could have a material adverse effect
on our business, reputation and results of operations and
could result in material fines and penalties, various forms of damages, consent orders regarding our privacy and
security practices, adverse actions against our licenses to do business, and injunctive relief.
ff
General Risk Factors
The failure to maintaitt nii effecff
security, thereby adverserr
tivevv and efficff
tingii
ient informa
ff
our financialii conditdd iontt
ly affff ecff
and results of operation
rr
s.
tion systyy ems at the Company could compromise datatt
Our business is highly dependent upon the internet, third-party service providers, and informat
operate in an effici
actuarial analysis, sales and policy administration functions.
ion systems to
ent and resilient manner. We gather and maintain data for the purpose of conducting marketing,
ff
ff
Malicious third-parties, employee or agent errors or disasters affect
ion systems could impair our
business operations, regulatory compliance and financial condition. Employee or agent malfeasance or errors in the
ion, or an
handling of our informat
inability to use our informat
ion systems may result in unauthorized access to customer or proprietary informat
ion systems to effiff ciently support business operations.
ing our informat
ff
ff
ff
ff
ff
More frequent and sophisticated cyberattacks and more impactful regulatory oversight models could result in
additional costs to protect against security breaches. Any breach of confidential informat
ion systems resulting from
the above factors could damage our reputation in the marketplace, deter potential customers from purchasing our
products, result in the loss of existing customers, subject us to significant civil and criminal liability, constrain cash
flows, or require us to incur significant technical, legal or other expenses.
ff
The failure to effeff ctivtt elvv yl maintaitt nii and modernize our informa
could adverselyl affeff ct our busines
s.
ff
ii
tion technology systems and infrastructure
ff
ff
ion technology systems and infrastructure requires us to commit to significant
Our ability to modernize our informat
ve planning, and execution. In addition, due to the highly regulated nature of the insurance
resources, effecti
industry, we must continually implement new technology or adapt existing technology to meet compliance
requirements of new and proposed regulations. Should we be unable to implement these innovations effecti
vely,
effiff ciently, or in a timely manner, it could result in poor customer experience, additional expenses, reputational harm,
ively
legal, and regulatory actions and other adverse consequences. This could also result in the inability to effect
support business operations.
ff
ff
Damage to the brand and reputation of Globe Life or its subsidiardd iesrr
businii ess.
could affeff ct our abilitii yt
to conduct
Negative publicity through traditional media, internet, social media and other public forums could damage our brand
or reputation and adversely impact our agent recruiting efforts,
the ability to market our products and the persistency
ff
of in-force
policies. The Company could be subjected to adverse publicity in the event of a significant security
ff
breach.
14
GL 2021 FORM 10-K
We may fail to meet expectations relatinll
practices.
g to envirovv
nmental, socialii
,ll and governance standardsdd and
Certain existing or potential investors, customers and regulators evaluate our business or other practices according
to a variety of environmental, social and governance (“ESG”) standards and expectations. Certain of our regulators
have proposed or adopted, or may propose or adopt, ESG rules or standards that would apply to our business. Our
practices may be judged by ESG standards that are continually evolving and not always clear. Prevailing ESG
standards and expectations may also reflect contrasting or conflicting values or agendas. We may fail to meet our
commitments or targets, and our policies and processes to evaluate and manage ESG standards in coordination
with other business priorities may not prove completely effect
ive or satisfy investors, customers, regulators, or
others. For example, as we consider the recommendations of SASB, TCFD, and develop our own ESG materiality
assessment, we may continue to expand our disclosures in these areas. Our failure to report accurately or achieve
progress on our metrics on a timely basis, or at all, could adversely affect
our reputation, business, financial
performance
and growth. We may face adverse regulatory, investor, customer, media, or public scrutiny leading to
business, reputational, or legal challenges.
ff
ff
ff
15
GL 2021 FORM 10-K
As of December 31, 2021, Globe Life had no unresolved SEC staffff comments.
Item 1B. Unresolved Staffff Comments
Item 2. Properties
Globe Life, through its subsidiaries, owns or leases buildings that are used in the normal course of business. Globe
Life owns and occupies approximately 500,000 combined square feet in McKinney, Texas (headquarters) and at the
Waco, Texas and Oklahoma City, Oklahoma campuses. Additionally, the Company leases other buildings across the
U.S.
Item 3. Legal Proceedings
Discussion regarding litigation and unclaimed property audits is provided in Note 6—Commitment
stt
Contingencie
s.
tt
tt
and
Not Applicable.
Item 4. Mine Safety Disclosures
16
GL 2021 FORM 10-K
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
The principal market in which Globe Life's common stock is traded is the New York Stock Exchange (NYSE: GL).
There were 2,125 shareholders of record on December 31, 2021, excluding shareholder accounts held in nominee
form.
The line graph shown below compares Globe Life's cumulative total return on its common stock with the cumulative
total returns of the Standard & Poor’s 500 Stock Index (S&P 500) and the Standard & Poor’s Life & Health
Insurance Index (S&P Life & Health Insurance). Globe Life's stock is included within both the S&P 500 and the S&P
Life & Health Insurance Index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Globe Life Inc., the S&P 500 Index and the S&P Life & Health Insurance
Index
$250
$200
$150
$100
$50
$0
12/16
12/17
12/18
12/19
12/20
12/21
Globe Life Inc.
S&P 500
S&P Life & Health Insurance
*$100 invested on 12/31/2016 in stock or index, including reinvestment of dividends. Fiscal year ended December 31.
Copyright© 2022 Standard & Poor's, a division of S&P Global. All rights reserved.
17
GL 2021 FORM 10-K
Purchases of Certain Equity Securities by the Issuer and Others for the Fourth Quarter 2021
(a)
(b)
(c)
(d)
Period
Total Number
of Shares
Purchased
Average
Price Paid
Per Share
Total Number of
Shares Purchased
as Part of
Publicly Announced
Plans or Programs
Maximum Number of
Shares (or Approximate Dollar
Amount) that May Yet Be
Purchased Under the
Plans or Programs
October 1-31, 2021 ....................
265,733
$
November 1-30, 2021................
December 1-31, 2021................
751,875
609,074
91.68
91.60
90.00
265,733
751,875
609,074
—
—
—
On August 4, 2021, Globe Life's Board reaffirmed
its continued authorization of the Company’s stock repurchase
program in amounts and with timing that management, in consultation with the Board, determined to be in the best
interest of the Company. The program has no defined expiration date or maximum number of shares to be
purchased.
ff
Item 6. [Reserved]
18
GL 2021 FORM 10-K
CAUTIONARY STATEMENTS
We caution readers regarding certain forward-looking statements contained in the foregoing discussion and
elsewhere in this document, and in any other statements made by, or on behalf of Globe Life whether or not in
future filings with the Securities and Exchange Commission. Any statement that is not a historical fact, or that might
otherwise be considered an opinion or projection concerning the Company or its business, whether express or
is meant as and should be considered a forward-looking statement. Such statements represent
implied,
financial results or other developments. We
management's opinions concerning future operations, strategies,
specifically disclaim any obligation to update or revise any forward-looking statement because of new informat
ion,
future developments, or otherwise.
ff
Forward-looking statements are based upon estimates and assumptions that are subject to significant business,
economic and competitive uncertainties, many of which are beyond our control, including uncertainties related to the
impact of the COVID-19 pandemic and associated direct and indirect effects
on our business operations, financial
results and financial condition. If these estimates or assumptions prove to be incorrect, the actual results of Globe
ff materially from the forward-looking statements made on the basis of such estimates or assumptions.
Life may differ
Whether or not actual results differ
materially from forward-looking statements may depend on numerous
foreseeable and unforeseeabl
e events or developments, which may be national in scope, related to the insurance
ff
industry generally, or applicable to the Company specifically. Such events or developments could include, but are
not necessarily limited to:
ff
ff
1. Economic and other conditions, including the COVID-19 pandemic and its impact on the U.S. economy,
leading to unexpected changes in lapse rates and/or sales of our policies, as well as levels of mortality,
ff
morbidity, and utilization of health care services that differ
from Globe Life's assumptions;
2. Regulatory developments,
regulations
(particularly those impacting taxes and changes to the Federal Medicare program that would affect
Medicare Supplement);
including changes in accounting standards or governmental
ff
3. Market trends in the senior-aged health care industry that provide alternatives to traditional Medicare (such
as Health Maintenance Organizations and other managed care or private plans) and that could affect
the
sales of traditional Medicare Supplement insurance;
Interest rate changes that affect
4.
5. General economic, industry sector or individual debt issuers’ financial conditions (including developments
and volatility arising from the COVID-19 pandemic, particularly in certain industries that may comprise part
of our investment portfolio) that may affect
the current market value of securities we own, or that may impair
an issuer’s ability to make principal and/or interest payments due on those securities;
product sales and/or investment portfolio yield;
ff
ff
ff
6. Changes in the competitiveness of the Company's products and pricing;
7. Litigation results;
8. Levels of administrative and operational efficiencies
that differ
ff
ff
from our assumptions (including any
resulting from increased costs arising from operating during the COVID-19
reduction in efficiencies
pandemic);
ff
9. The ability to obtain timely and appropriate premium rate increases for health insurance policies from our
regulators;
10. The customer response to new products and marketing initiatives;
11. Reported amounts in the consolidated financial statements which are based on management estimates and
judgments which may diffeff
r from the actual amounts ultimately realized;
12. Compromise by a malicious actor or other event that causes a loss of secure data from, or inaccessibility to,
our computer and other informat
ff
ion technology systems;
13. The severity, magnitude and impact of the COVID-19 pandemic, including effects
of the pandemic and the
s of the U.S. and state governments' and other businesses’ response to the pandemic, on our
effect
operations and personnel, and on commercial activity and demand for our products; and
ff
ff
14. Our ability to access the commercial paper and debt markets, particularly if such markets become
unpredictable or unstable for a certain period as a result of the COVID-19 pandemic.
Readers are also directed to consider other risks and uncertainties described in other documents on file with the
Securities and Exchange Commission.
19
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Globe Life's Consolidated Financial Statett mentstt and
Notes thereto appearing elsewhere in this report. The following management discussion will only include
comparison to prior year. For discussion regarding activity from 2019, please refer to the prior filed Form 10-Ks at
www.sec.gov.
"Globe Life" and the "Company" referff
to Globe Life Inc. and its subsidiaries and affiliates.
Results of Operations
How Globe Life Views Its Operations. Globe Life Inc. is the holding company for a group of
insurance companies that market primarily individual life and supplemental health insurance to lower
middle to middle income households throughout the United States. We view our operations by
segments, which are the insurance product lines of life, supplemental health, and annuities, and the
investment segment that supports the product lines. Segments are aligned based on their common
characteristics, comparability of the profit margins, and management techniques used to operate
each segment.
Insurance Product Line Segments. The insurance product line segments involve the marketing,
underwriting, and administration of policies. Each product line is further segmented by the various
distribution channels that market the insurance policies. Each distribution channel operates in a
niche market offering
insurance products designed for that particular market. Whether analyzing
profitability of a segment as a whole, or the individual distribution channels within the segment, the
measure of profitability used by management is the underwriting margin, as seen below:
ff
Premium revenue
(Policy obligations)
)
(Policy acquisition costs and commissions)
q
(
Underwriting margin
y
Investment Segment. The investment segment involves the management of our capital resources,
including investments and the management of corporate debt and liquidity. Our measure of
profitability for the investment segment is excess investment income, as seen below:
Net investment income
(Required interest on net policy liabilities)
)
(Financing costs)
(
Excess investment income
g
20
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Current HigHH hligll hts, comparingii
year-to-date 2tt
021 with 2020.
•
•
•
•
•
••
•
Net income as a return on equity (ROE) forff
income as an ROE, excluding net unrealized gains on the fixed maturity portfolio(1) was 12.3%.
the year ended December 31, 2021 was 8.8% and net operating
l premium increased 7% over the prior year. Life premium increased 8% for the period from $2.7 billion
TotaTT
in 2020 to $2.9 billion in 2021. Life underwriting margin declined 8% from $675 million in 2020 to $624
million in 2021.
Net investment income increased 3% over the same period in the prior year. Excess investment income
declined 2% below the prior year.
TotaTT
l net sales increased 7% over the same period in the prior year from $662 million to $706 million.
Book value per share increased 3% over the same period in the prior year from $83.19 to $85.97. Book
value per share, excluding net unrealized gains on the fixed maturity portfolio(1), increased 10% over the
prior year from $53.12 to $58.50.
The Company incurred $140 million of COVID-19 net life claims (net of reserves released upon death) for
the year ended December 31, 2021 compared with $67 million during the same period last year.
or the year ended December 31, 2021, the Company
Company repurchased 4.8 million shares fof GGlobe
fLife Inc.
F
common stock at a total cost
fof $$455 million ffor an
average share price fof $$95.11.
g
The following graphs represent net income and net operating income for the three years ended December 31, 2021.
Net Income
(Dollar amounts in thousands)
Net Operating Income
(Dollar amounts in thousands)
$760,790
$731,773
$744,959
$1,000,000
$750,000
$500,000
$250,000
$0
$752,102
$737,592
$707,497
$1,000,000
$750,000
$500,000
$250,000
$0
2019
2020
2021
2019
2020
2021
(1) As shown in the charts above, net operating income is the consolidated total of segment profits after tax and as such is considered a non-
nce of the
measure. It has been used consistently by Globe Life's management forff many years to evaluate the operating performa
s from net income primarily because it excludes certain non-operating items such as realized gains and losses and certain
GAAPA
Company. It differ
significant and unusual items included in net income. Net income is the most directly comparable GAAP measure.
rr
ff
Net operating income as an ROE, excluding net unrealized gains on the fixed maturity portfolio, is considered a non-GAAP measure.
t of the net unrealized gains, which are primarily attributable to
Management utilizes this measure to view the business without the effecff
fluctuation in interest rates on the available-for-sale portfoli
f o. The impact of the adjustment to exclude net unrealized gains on fixed
maturities, net of tax is $2.8 billion and $3.2 billion forff
the year ended December 31, 2021 and 2020, respectively.
Book value per share, excluding net unrealized gains on the fixed maturity portfolio, is also considered a non-GAAP measure. Management
utilizes this measure to view the book value of the business without the effeff ct of net unrealized gains, which are primarily attributable to
fluctuation in interest rates on the available-for-sale portfolio. The impact of the adjustment to exclude net unrealized gains on fixed maturities
is $27.47 and $30.07 forff
year ended December 31, 2021 and 2020, respectively.
Refer to Analysl
ff
is of Profrr
itabil
ityll
by Segment for non-GAAP reconciliation to GAAP.
21
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Summary of Operarr tions. Net income increased 2% to $745 million in 2021, compared with $732 million in 2020.
This increase was primarily related to an increase in realized gains offset
by higher COVID-19 life claims. On a
diluted per common share basis, net income per common share for 2021 increased from $6.82 to $7.22. Included in
net income were after-tax realized gains of $47 million in 2021, compared with realized after-tax losses of $2 million
for 2020. Realized gains and losses are presented more fully under the caption Realized Gains and Losses in this
report.
ff
Net operating income from continuing operations declined 4% to $707 million in 2021, compared with $738 million in
2020. On a diluted per common share basis, net operating income per common share decreased slightly from $6.88
to $6.86. Net operating income is the consolidated total of segment profits after tax and as such is considered a
non-GAAP measure. Net income is the most directly comparable GAAPAA
measure. We do not consider realized
gains and losses to be a component of our core insurance operations or operating segments. Additionally, net
ed by certain significant and unusual non-operating items in 2020 and 2021. We do not view
income was affect
these items as components of core operating results because they are not indicative of past performance or future
prospects of the insurance operations. We remove items such as these that relate to prior periods or are non-
operating items when evaluating the results of current operations, and therefore exclude such items from our
segment analysis for current periods.
ff
Despite headwinds with COVID-19, the Company continues to see positive signs in its core operations, including
strong sales, favorable persistency and a strong ROE, excluding net unrealized gains on the fixed maturity portfolio.
COVID-19.
For the year ended December 31, 2021, the Company incurred $140 million of COVID-19 net life claims.
II
Per the Centers for Disease Control and Prevention (CDC), there were approximately 460 thousand U.S. COVID-19
deaths in 2021. In the second half of the year, the COVID-19 deaths were concentrated in geographies and younger
age groups where the Company has greater risk exposure. The Company’s level of COVID-19 net life claims, on
average for the year, was approximately $3 million per 10,000 U.S. deaths.
Going forward, we anticipate that COVID-19 deaths will continue at elevated levels throughout 2022, with an impact
of approximately $50 million at the mid-point of our guidance based on incurred claims in the range of $3 million to
$4 million per 10,000 U.S. deaths. The projected life claims are dependent on this estimate and many other
variables, including, but not limited to, projected U.S. deaths from COVID-19, the timing and availability of effeff ctive
treatments for the disease, vaccination rates, and effect
iveness of vaccines, impact from potential variants, and the
ages and geographic areas in which infections and deaths occur.
ff
22
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Globe Life's operations on a segment-by-segment basis are discussed in depth below. Net operating income has
been used consistently by management forf many years to evaluate the operating performance
of the Company and
is a measure commonly used in the life insurance industry. It differs
net income primarily because it
excludes certain non-operating items such as realized gains and losses and other significant and unusual items
included in net income. Management believes an analysis of net operating income is important in understanding the
profitability and operating trends of the Company’s business. Net income is the most directly comparable GAAPAA
measure.
from GAAPAA
ff
ff
Analysis of Profitability by Segment
(Dollar amounts in thousands)
2021
2020
2019
2021
Change
%
2020
Change
%
(4)
12
(5)
(5)
28,731
(429)
(13,181)
7
(10,626)
1
4
(2)
—
(2)
(14,696)
186
(14,510)
(18,206)
(501)
92
400
(308)
4,016
Life insurance underwriting margin .................. $ 623,675
Health insurance underwriting margin .............
304,302
$ 674,946
$
703,464
$ (51,271)
(8) $ (28,518)
272,369
243,638
31,933
Annuity underwriting margin..............................
8,704
9,029
9,458
Excess investment income ................................
238,528
244,424
257,605
(325)
(5,896)
Other insurance:
Other income..................................................
1,216
1,325
1,318
(109)
Administrative expense.................................
(271,631)
(250,947)
(240,321)
(20,684)
12
(4)
(2)
(8)
8
Corporate and other............................................
(39,825)
(45,783)
(55,103)
5,958
(13)
9,320
(17)
Pre-tax total................................................
864,969
905,363
920,059
(40,394)
Applicable taxes ..................................................
(157,472)
(167,771)
(167,957)
10,299
Net operating income ..............................
707,497
737,592
752,102
(30,095)
(4)
(6)
(4)
Reconciling items, net of tax:
Realized gain (loss)—investments .............
54,220
Realized loss—redemption of debt.............
(7,358)
Part D adjustments—discontinued
operations .......................................................
Administrative settlements ...........................
Non-operating expenses ..............................
—
(1,047)
(1,923)
Legal proceedings .........................................
(6,430)
Net income .............................................. $ 744,959
(1,915)
(501)
—
—
(816)
(2,587)
16,291
—
(92)
(400)
(508)
(6,603)
56,135
(6,857)
—
(1,047)
(1,107)
(3,843)
$ 731,773
$
760,790
$ 13,186
2
)
$ (29,017)
)
(
(
( )( )
(4)
The life insurance segment is our primary segment and is the largest contributor to earnings in each year presented.
The life insurance segment underwriting margin declined $51 million compared with the prior year, primarily due to
higher life claims related to COVID-19 offset
by premium growth. The health segment contributed to growth in
income in both years contributing $32 million of additional underwriting margin in 2021 and $29 million in 2020.
ff
23
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
In 2021, the largest contributor of total underwriting margin was the life insurance segment and the primary
distribution channel was American Income Life Division. The following charts represent the breakdown of total
underwriting margin by operating segment and distribution channel for the year ended December 31, 2021.
2021
Total Underwriting Margin
by Segment
2021
Total Underwriting Margin
by Distribution Channel
32%
1%
52%
12%
8%
10%
9%
9%
67%
Life
Health
Annuity
American Income Life Division
Liberty National Division
Direct to Consumer Division
Family Heritage Division
United American Division
Other
Total premium income rose 7% for the year ended December 31, 2021 to $4.1 billion. Total net sales increased 7%
to $706 million, when compared with 2020. Total first-year collected premium (defined in the following section) was
$583 million for 2021, compared with $547 million for 2020.
Life insurance premium income increased 8% to $2.9 billion over the prior year total of $2.7 billion. Life net sales
rose 8% to $522 million for the year ended 2021. First-year collected life premium rose 14% to $423 million. Life
underwriting margins, as a percent of premium, declined to 22% in 2021 from 25% in the prior year. Underwriting
margin declined to $624 million in 2021, 8% below the same period in 2020. The decline in the life underwriting
margin is primarily due to approximately $140 million of COVID-19 net life claims incurred during the year ended
2021 versus $67 million during the same period in 2020.
Health insurance premium income increased 5% to $1.20 billion over the prior year total of $1.14 billion. Health net
sales rose 4% to $184 million for the year ended 2021. First-year collected health premium fell 9% to $160 million.
Health underwriting margins, as a percent of premium, increased to 25% in 2021 compared with 24% in 2020.
Health underwriting margin increased to $304 million for the year ended 2021, 12% over the same period in 2020.
Excess investment income, the measure of profitability of our investment segment, declined 2% during 2021 to
$239 million from $244 million in the same period in 2020. Excess investment income per common share, reflecting
the impact of our share repurchase program, increased 1% to $2.31 from $2.28 when compared with the same
period in 2020.
Insurance administrative expenses increased 8% in 2021 when compared with the prior year period. These
expenses were 6.6% as a percent of premium during the year ended 2021 and 2020.
For the year ended December 31, 2021, the Company repurchased 4.8 million Globe Life Inc. shares at a total cost
of $455 million for an average share price of $95.11.
24
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
The discussions of our segments are presented in the manner we view our operations, as described in Note 14—
Business Segmentstt .
We use three statistical measures as indicators of premium growth and sales over the near term: “annualized
premium in force,” “net sales,” and “first-year collected premium.”
•
•
•
Annualized premium in force is defined as the premium income that would be received over the following
twelve months at any given date on all active policies if those policies remain in force throughout the twelve-
month period. Annualized premium in force is an indicator of potential growth in premium revenue.
Net sales, a statistical performance measure,
is calculated as annualized premium issued, net of
cancellations in the first thirty days after issue, except in the case of Direct to Consumer, where net sales is
annualized premium issued at the time the first full premium is paid after any introductory offer
period has
expired. Management considers net sales to be a better indicator of the rate of premium growth than
annualized premium issued.
ff
First-year collected premium is defined as the premium collected during the reporting period for all policies
in their first policy year. First-year collected premium takes lapses into account in the first year when lapses
are more likely to occur, and thus is a useful indicator of how much new premium is expected to be added
to premium income in the future.
See further discussion of the distribution channels below for Life and Healthtt .
25
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
LIFE INSURANCE
total
Life insurance is the Company's predominant segment. During 2021,
premium and life underwriting margin represented 67% of
investments supporting the
reserves for life products produce the majority of excess investment income attributable to the investment segment.
life premium represented 71% of
the total. Additionally,
The following table presents the summary of results of life insurance. Further discussion fof the results yby distribution
channel is included below.
Life Insurance
Summary of Results
(Dollar amounts in thousands)
Premium and policy charges ....................... $ 2,898,210
100
$ 2,672,804
100
$ 2,517,784
100
2021
2020
2019
Amount
% of
Premium
Amount
% of
Premium
Amount
% of
Premium
Policy obligations...........................................
2,070,485
Required interest on reserves .....................
(735,282)
Net policy obligations.................................
1,335,203
Commissions, premium taxes, and non-
deferred acquisition expenses ....................
Amortization of acquisition costs ................
234,033
705,299
Total expense..............................................
2,274,535
Insurance underwriting margin .............. $
623,675
71
(25)
46
8
24
78
22
1,809,373
(698,112)
1,111,261
212,859
673,738
1,997,858
$
674,946
68
(26)
42
8
25
75
25
1,638,053
(666,168)
971,885
203,052
639,383
1,814,320
$
703,464
65
(26)
39
8
25
72
28
The lower life insurance underwriting margins for the year ended December 31, 2021 are primarily attributed to
approximately $140 million of COVID-19 net life cf
laims, compared with $67 million in the prior year.
26
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Life insurance products are marketed through several distribution channels. Premium income by distribution
channel for each of the last three years is as folff
lows:
Life Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)
2021
2020
2019
American Income........................................................ $ 1,402,878
Direct to Consumer ....................................................
971,461
Liberty National ...........................................................
311,081
Other.............................................................................
212,790
Total ......................................................................... $ 2,898,210
Amount
% of
Total
Amount
$ 1,257,726
906,959
293,897
214,222
% of
Total
47
34
11
8
Amount
$ 1,160,495
855,543
285,551
216,195
% of
Total
46
34
11
9
48
34
11
7
100
$ 2,672,804
100
$ 2,517,784
100
Annualized life premium in force was $2.9 billion at December 31, 2021, an increase of 7% over $2.7 billion a year
earlier.
The following table shows net sales informff
ation forff
each of the last three years by distribution channel.
Life Insurance
Net Sales by Distribution Channel
(Dollar amounts in thousands)
2021
2020
2019
Amount
% of
Total
American Income........................................................ $
290,512
Direct to Consumer ....................................................
148,846
Liberty National ...........................................................
Other.............................................................................
71,184
11,055
56
28
14
2
Amount
$
253,276
165,426
54,931
10,371
% of
Total
52
34
12
2
Amount
$
237,587
126,208
53,718
12,301
% of
Total
55
29
13
3
Total ......................................................................... $
521,597
100
$
484,004
100
$
429,814
100
The table below discloses first-year collected life premium by distribution channel.
Life Insurance
First-Year Collected Premium by Distribution Channel
(Dollar amounts in thousands)
2021
2020
2019
Amount
% of
Total
American Income........................................................ $
Direct to Consumer ....................................................
Liberty National ...........................................................
Other.............................................................................
250,937
111,761
50,336
9,705
59
27
12
2
Amount
$
214,566
104,262
42,435
10,190
% of
Total
58
28
11
3
Amount
$
195,225
82,615
39,840
11,564
% of
Total
59
25
12
4
Total ......................................................................... $
422,739
100
$
371,453
100
$
329,244
100
27
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
A discussion of life operations by distribution channel follows.
The American Income Life Division markets to members of labor unions and continues to diversify i
ts lead
sources by building relationships with other affinity groups, utilizing third-party internet vendor leads and obtaining
referrals to facilitate sustainable growth. This division is Globe Life's largest contributor of life premium of any
distribution channel at 48% of the Company's 2021 total life premium. Net sales increased 15% to $291 million in
2021 over the 2020 total of $253 million. The increase in net life sales is due to increased productivity and well as
an increase in agent count. Premium increased 12% primarily due to improved persistency and higher sales. The
underwriting margin, as a percent of premium, was 30% for the year ended December 31, 2021, down from 32%
from the prior year primarily due to higher COVID-19 claims and higher reserve increases from lower policy lapse
rates.
ff
This division incurred $36 million in COVID-19 net life claims, representing approximately 3% of premium, for the
year ended December 31, 2021, compared with $18 million in COVID-19 net life cff
laims during the prior year.
Below is the average producing agent count at the end of the period for the American Income Life Division. The
average producing agent count is based on the actual count at the end of each week during the year. The division
continues to see a significant recruiting opportunity due to the current economic conditions and our ability to recruit
virtually and in-person. Sales growth in our exclusive agencies is generally dependent on growth in the size of the
agency force.
American Income.......................................................
9,971
8,738
7,360
1,233
2021
2020
2019
2021
Change
%
14
2020
Change
1,378
%
19
incentives and training opportunities,
American Income Life continues to focus on growing and strengthening the agency force, specifically through
emphasis on agency middle-management growth and additional agency officeff
openings. In addition to offering
the agency has made considerable investments in information
financial
technology, including a customer relationship management (CRM) tool forff
the agency force. This tool is designed to
drive productivity in lead distribution, conservation of business, manager dashboards and new agent recruiting.
Additionally, this division has invested in and successfully implemented technology that allows the agency force to
engage in virtual recruiting, training and sales activity. Over the past year and through the pandemic, the agents
have shiftedff
to primarily a virtual experience with the customers and have generated a vast majority of its sales
through virtual presentations. We find this flexibility to be enticing for new recruits as well as a driver of sustainability
for our agency force.
ff
ff
including direct mailings,
insert media, and electronic media.
adult and juvenile life insurance through a variety of marketing
The Direct to Consumer Division (DTC) offers
approaches,
In recent years, production from
electronic media, which is comprised of sales through both the internet and inbound phone calls to our call center,
has grown rapidly compared with direct mail response as management has aggressively increased marketing
activities related to internet and mobile technology as well as focused on driving trafficff
to our inbound call center.
This had been steadily increasing prior to COVID-19, but the pandemic accelerated this activity due in part to the
approaches support and
ff
awareness of needing life insurance from the effect
complement one another in the division's effort
s to reach the consumer. The DTC's long-term growth has been
fueled by constant innovation and name recognition. We continually introduce new initiatives in this division in an
attempt to increase response rates.
s of COVID-19. The different
f
ff
While the juvenile market is an important source of sales, it also is a vehicle to reach the parents and grandparents
of juvenile policyholders, who are more likely to respond favorably to a DTC solicitation for life coverage on
themselves than is the general adult population. Also, both juvenile policyholders and their parents are low
acquisition-cost targets forff
sales of additional coverage over time.
The DTC division continued to see high demand of its life insurance products in the current year primarily through
its internet and inbound phone channels as a result of the response from COVID-19. Our continued investments in
technology have allowed us to successfully serve the higher demands for our products through the digital self-serve
and phone channels.
ff
28
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
DTC net sales decreased 10% to $149 million for the year ended December 31, 2021 compared with $165 million in
the prior year, primarily due to the record high net life sales in the prior year at the onset of the pandemic. We
expect continued strong sales in 2022 due to the heightened awareness as to the benefits of life insurance.
in 2021
DTC incurred $69 million of COVID-19 net
compared with $35 million in 2020. DTC’s underwriting margin, as a percent of premium, was 7% forff
the year ended
December 31, 2021, which was lower than the 14% result in 2020 primarily due to higher COVID-19 net life claims
in 2021.
life claims, representing approximately 7% of premium,
The Liberty National Division markets individual
life insurance to middle-income household and worksite
customers. Recent investments in new sales technologies as well as recent growth in middle management within
the agency will help continue this growth. The underwriting margin as a percent of premium was 17%, down from
23% for the year ended 2020. The decrease is primarily attributable to higher than normal policy obligations during
2021 as a result of COVID-19. This division incurred $28 million of COVID-19 net
life claims, representing
approximately 9% of premium, for the year ended December 31, 2021 compared with $12 million in 2020. Net sales
increased 30% in 2021 over 2020. With the division's ability to return to face-to-face customer interaction and the
option of virtual sales, total net life sales increased for the full year 2021. However, due to higher policy obligations
as result of COVID-19, underwr
iting margin as a percent of premium was lower for the full year 2021 as compared
with 2020.
rr
Below is the average producing agent count at the end of the period for Liberty National Division. As the division
continues to gain momentum in its sales and recruiting initiatives and advances its technology and CRM platform,
the agency should see an increase in recruiting of new agents and an increase in the average producing agent
count.
Liberty National ..........................................................
2,716
2,575
2,350
141
2021
2020
2019
2021
Change
%
5
2020
Change
225
%
10
The Liberty National Division average producing agent count increased 5% in 2021. We continue to execute our
long-term plan to grow this agency through expansion from small-town markets in the Southeast to more densely
populated areas with larger pools of potential agent recruits and customers. Continued expansion of this agency’s
presence into more heavily populated, less-penetrated areas will help create long-term agency growth. Additionally,
the agency continues to help improve the ability of agents to develop new worksite marketing business. Systems
that have been put in place, including the addition of a CRM platform and enhanced analytical capabilities, have
helped the agents develop additional worksite marketing opportunities as well as improve the productivity of agents
selling in the individual life market.
gAgencies distribution channels
The OOther
predominantlyy l fife insurance. The OOther gAgencies contributed $$213 million fof
fLife's total in 2021, but cont ut
rib ed only 2% of net sales for the year.
y
primarily include non-exclusive independent
selling
g
flife premium income, or %7% fof GGlobe
gagencies
HEALTH INSURANCE
Health insurance sold by the Company primarily includes Medicare Supplement insurance, accident coverage, and
illness, heart, and intensive care
other limited-benefit supplemental health products including cancer, critical
coverage.
Health premium accounted for 29% of our total premium in 2021, while the health underwriting margin accounted
for 32% of total underwriting margin. Health underwriting margin increased 12% to $304 million primarily due to
lower policy obligations. The Company continues to emphasize life insurance sales relative to health due to life’s
superior long-term profitability and its greater contribution to excess investment income.
29
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
The folff
lowing table presents underwr
rr
iting margin data forff
health insurance.
Health Insurance
Summary of Results
(Dollar amounts in thousands)
Premium ............................................................ $ 1,201,676
100
$ 1,141,097
100
$ 1,077,346
100
2021
2020
2019
Amount
% of
Premium
Amount
% of
Premium
Amount
% of
Premium
Policy obligations .............................................
Required interest on reserves........................
758,745
(102,574)
Net policy obligations ...................................
656,171
Commissions, premium taxes, and non-
deferred acquisition expenses .......................
Amortization of acquisition costs ...................
Total expense.................................................
97,453
143,750
897,374
Insurance underwriting margin ................ $
304,302
63
(8)
55
8
12
75
25
733,481
(93,475)
640,006
91,959
136,763
868,728
$
272,369
64
(8)
56
8
12
76
24
687,764
(87,289)
600,475
94,973
138,260
833,708
$
243,638
64
(8)
56
8
13
77
23
Health premium increased 5% from $1.14 billion in 2020 to $1.20 billion in 2021. Health underwriting margin
increased 12% from $272 million in 2020 to $304 million in 2021 primarily due to growth in premiums. Further
discussion is included below yby distribution channel.
Globe Life markets supplemental health insurance products through a number of distribution channels. The
following table is an analysis of our health premium by distribution channel for each of the last three years.
Health Insurance
Premium by Distribution Channel
(Dollar amounts in thousands)
2021
2020
2019
United American....................................................... $
481,614
Family Heritage ........................................................
Liberty National ........................................................
American Income .....................................................
343,839
187,327
114,950
Direct to Consumer..................................................
73,946
Total ....................................................................... $ 1,201,676
Amount
% of
Total
Amount
$
452,980
317,021
188,835
105,734
76,527
% of
Total
40
28
16
9
7
Amount
$
416,582
294,182
189,578
99,447
77,557
% of
Total
39
27
18
9
7
40
29
16
9
6
100
$ 1,141,097
100
$ 1,077,346
100
Of total health premium of $1.2 billion, premium from limited-benefit plans comprise $639 million, or 53% of the
total,
for 2021 compared with $588 million in the prior year. Premium from Medicare Supplement products
comprises the remaining 47% or $563 million for 2021 compared with $553 million in 2020. Annualized health
premium in force was $1.29 billion at December 31, 2021, an increase of 8% over the prior year balance of $1.19
billion.
30
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Presented below is a table of health net sales by distribution channel for the last three years.
Health Insurance
Net Sales by Distribution Channel
(Dollar amounts in thousands)
2021
2020
2019
United American........................................................................ $
Family Heritage.........................................................................
Liberty National .........................................................................
American Income......................................................................
63,551
72,600
26,512
18,230
Direct to Consumer ..................................................................
3,465
Total ....................................................................................... $ 184,358
Amount
% of
Total
Amount
$
61,690
70,665
22,905
18,817
3,594
% of
Total
35
40
13
10
2
Amount
$
79,218
65,626
24,504
18,059
3,827
% of
Total
41
34
13
10
2
35
39
14
10
2
100
$ 177,671
100
$ 191,234
100
Of total net sales of $184 million, sales of limited-benefit plans comprise $118 million, or 64% of the total, for 2021
compared with $113 million in 2020. Medicare Supplement sales make up the remaining 36%, or $66 million for
2021 compared with $65 million in 2020.
The following table discloses first-year collected health premium by distribution channel.
Health Insurance
First-Year Collected Premium by Distribution Channel
(Dollar amounts in thousands)
2021
2020
2019
United American ........................................................................ $
Family Heritage..........................................................................
Liberty National..........................................................................
American Income ......................................................................
60,386
57,427
20,348
18,939
Direct to Consumer ...................................................................
3,253
Total ........................................................................................ $ 160,353
Amount
% of
Total
Amount
$
79,628
54,242
20,169
18,536
3,051
% of
Total
45
31
11
11
2
Amount
$
72,021
50,204
19,698
17,142
3,749
% of
Total
44
31
12
11
2
37
36
13
12
2
100
$ 175,626
100
$ 162,814
100
First-year collected premium related to limited-benefit plans comprise $99 million, or 62% of total first-year collected
premium for 2021 compared with $93 million in 2020. First-year collected premium from Medicare Supplement
policies make up the remaining 38%, or $61 million for 2021 compared with $83 million in 2020.
A discussion of health operations by distribution channel follows.
The United American Independent Agency consists of non-exclusive independent agencies who may also sell for
other companies. The United American Independent Agency was Globe Life's largest health agency in terms of
health premium income.
This division is also Globe Life's largest producer of Medicare Supplement insurance, responsible forf
82% of the
Company's Medicare Supplement premium and 95% of Medicare Supplement net sales. Medicare Supplement
premium in this agency rose 4% to $460 million in 2021 over the prior period net sales of $443 million. Medicare
Supplement net sales increased 2% to $63 million in 2021 from the prior year. The Medicare Supplement market is
highly competitive and thus sales will fluctuate over the years. Underwriting margin as a percent of premium was flat
at 15% for 2021 compared with 2020.
31
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
ii
Accountingtt
Policies, the Company acquired Beazley Benefits, now rebranded
ff
As discussed in Note 1—Signif
icant
as Globe Life Benefits, on August 1, 2021. Globe Life Benefits enhances the Company's presence in the worksite
market by offeri
ng group supplemental health insurance solutions to employer groups through brokers. While the
acquisition had an immaterial impact on year-to-date results, we are optimistic about Globe Life Benefits' ability to
contribute additional health premium and profits in the future. Operating results forff Globe Life Benefits are included
as part of United American Division results.
ff
The Family Heritage Division primarily markets limited-benefit supplemental health insurance in non-urban areas.
Most of its policies include a cash-back feature, such as a return of premium, where any excess of premiums over
claims paid is returned to the policyholder at the end of a specified period stated within the insurance policy.
Underwriting margin as a percent of premium was 27%, up from 26% for the year ended December 31, 2020. The
increase was primarily attributable to favorable claims experience.
The division experienced a 3% increase in net health sales in 2021 as compared with the 2020, primarily due to an
increase in agent productivity and training. The division will continue to launch incentive programs to help drive an
increase in productivity and the number of producing agents.
Below is the average producing agent count at the end of the indicated periods for the Family Heritage Division.
While the agency has seen a decrease in agent count as compared with 2020, we anticipate that as COVID-19 and
the job market stabilize, agent recruitment opportunities should increase.
Average producing agents .......................................
1,213
1,325
1,112
(112)
(8)
213
2021
2020
2019
2021
Change
%
2020
Change
%
19
The Liberty National Division represented 16% of all Globe Life health premium income at $187 million in 2021.
Liberty National markets limited-benefit supplemental health products consisting primarily of critical
illness
insurance. Much of Liberty National’s health business is generated through worksite marketing targeting small
businesses of 10 to 100 employees. In 2021, health premium income declined 1%. Liberty National's first-year
collected premium increased 1% to $20.3 million in 2021 compared with $20.2 million in 2020. Health net sales for
2021 increased by $4 million or 16% from 2020. We anticipate an increase in net health sales going forward at this
division as the Company becomes more able to interact face-to-face with customers.
ii
buii
Other distri
tion. While some of the Company's other distribution channels market health products, selling life
insurance is the main emphasis. On a combined basis, they accounted for 15% of health premium in 2021 and 16%
in 2020. The American Income Life Division primarily markets accident plans. The Direct to Consumer Division
markets primarily Medicare Supplements to employer or union-sponsored groups, adding $3 million of Medicare
Supplement net sales in 2021 and $4 million in 2020.
ANNUITIES
Our fixed annuity balances at
Underwriting margin was $8.7 million for 2021 and $9.0 million for 2020.
the end of 2021 and 2020 were $1.03 billion and $1.06 billion, respectively.
We do not currently market stand-alone fixed or deferred annuity products, favoring instead protection-oriented life
we do not expect that annuities will be a significant portion
ff
and supplemental health insurance products. Therefore,
of our business or marketing strategy going forward.
32
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
INVESTMENTS
We manage our capital resources including investments, debt, and cash flow through the investment segment.
Excess investment income represents the profit margin attributable to investment operations and is the measure
that we use to evaluate the performance of the investment segment as described in Note 14—Business Segmentstt .
It is defined as net investment income less both the required interest on net insurance policy liabilities and the
interest cost associated with capital funding or “financing costs.”
ff
Management also views excess investment income per diluted common share as an important and useful measure
to evaluate the performance
of the investment segment. It is defined as excess investment income divided by the
total diluted weighted average shares outstanding, representing the contribution by the investment segment to the
consolidated earnings per share of the Company. Since implementing our share repurchase program in 1986, we
have used $8.7 billion of excess cash flow at the Parent Company to repurchase Globe Life Inc. common shares
after determining that the repurchases provided a greater risk adjusted after-tax return than other investment
alternatives. If we had not used this excess cash to repurchase shares, but had instead invested it in interest-
bearing assets, we would have earned more investment income and had more shares outstanding. As excess
investment income per diluted common share incorporates all capital resources, we view excess investment income
per diluted common share as a useful measure to evaluate the investment segment.
Excess Investmen
income, and excess investment income per diluted common share.
t IncII ome. The folff
vv
lowing table summarizes Globe Life's investment income, excess investment
Analysis of Excess Investment Income
(Dollar amounts in thousands except per share data)
Net investment income .................................................................................................. $
Interest on net insurance policy liabilities:
2021
2020
2019
952,447
$
927,062
$
910,459
Required interest on reserves ...................................................................................
(877,822)
(833,000)
(796,979)
Required interest on deferred acquisition costs .....................................................
247,389
237,066
228,431
Net required interest..................................................................................................
(630,433)
(595,934)
(568,548)
Financing costs ...............................................................................................................
(83,486)
(86,704)
(84,306)
Excess investment income .................................................................................. $
238,528
$
244,424
$
257,605
Excess investment income per diluted common share ............................... $
2.31
$
2.28
$
2.31
Mean invested assets (at amortized cost).................................................................. $ 18,939,317
Average net insurance policy liabilities(1) ....................................................................
Average debt and preferred securities (at amortized cost)......................................
10,954,500
2,053,935
$ 17,987,502
$ 17,026,058
10,460,539
10,068,120
1,859,298
1,650,081
(1) Net of deferred acquisition costs, excluding the associated unrealized gains and losses thereon.
Excess investment income declined $6 million or 2% during 2021. Excess investment income per diluted common
share increased 1% during 2021. Excess investment income per diluted common share generally increases at a
faster pace than excess investment income because the number of diluted shares outstanding generally decreases
from year to year as a result of our share repurchase program.
33
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Net investment income increased at a compound annual growth rate of 3% over the 3 years ending 2021 while
mean invested assets increased at a compound rate of 5% during the same period. The tax equivalent effect
ive
annual yield rate earned on the fixed maturity portfolio was 5.21% in 2021. Growth in net investment income has
been negatively impacted in recent years by the low interest rate environment during which time we have invested
new money at yields lower than our average portfolio yield. In addition, we have reinvested the proceeds from
bonds that matured, were called, or were otherwise disposed of at yield rates less than the yield earned on these
disposed bonds. We currently expect that the average annual turnover rate of fixed maturity assets will be less than
2% over the next five years and will not have a material negative impact on net investment income. In addition to
fixed maturities, the Company has also invested in limited partnerships with debt like characteristics that diversifyff
risk and enhance risk-adjusted, capital-adjusted returns on the portfolio. The earned yield on the investment funds
for the year ended December 31, 2021 was 5.24%. See additional
ion in Note 4—Investments. The
following chart presents the growth in net investment income and the growth in mean invested assets.
informat
ff
ff
Growth in net investment income .......................................................................
Growth in mean invested assets (at amortized cost) ......................................
2.7 %
5.3 %
1.8 %
5.6 %
3.2 %
4.8 %
2021
2020
2019
Should the current low interest rate environment continue, the growth of the Company's net investment income will
be negatively impacted primarily due to the investment of new money and proceeds from dispositions at rates less
than the average portfolio yield rate. While net investment income would grow, it would continue to grow at rates
less than the growth in mean invested assets.
Should interest rates, especially long-term rates, rise, Globe Life's net investment income would benefit due to
higher interest rates on new investments. While such a rise in interest rates could adversely affect
the fair value of
the fixed maturities portfolio, we could withstand an increase in interest rates of approximately 140 to 145 basis
points before the net unrealized gains on our fixed maturity portfolio as of December 31, 2021 would be eliminated.
Should interest rates increase further, we would not be concerned with potential
interest rate driven unrealized
losses in our fixed maturity portfolioff
because we do not intend to sell nor is it likely that management will be required
to sell the fixed maturities prior to their anticipated recovery.
ff
Required interest on net insurance policy liabilities reduces net investment income, as it is the amount of net
investment income considered by management necessary to “fund” required interest on net insurance policy
liabilities, which is the net of the benefit reserve liability and the deferred acquisition cost asset. As such, it is
removed from the investment segment and applied to the insurance segments to offset
of the required
interest from the insurance segments. As discussed in Note 14—Business Segments,tt management regards this as
a more meaningful analysis of the investment and insurance segments. Required interest is based on the actuarial
interest assumptions used in discounting the benefit reserve liability and the amortization of deferred acquisition
costs for our insurance policies in force.
ff
the effect
ff
The great majority of our life and health insurance policies are fixed interest rate protection policies, not investment
products, and are accounted for under current GAAPAA
accounting guidance for long-duration insurance products
which mandate that interest rate assumptions for a particular block of business be “locked in” for the life of that
block of business. Each calendar year, we set the discount rate to be used to calculate the benefit reserve liability
and the amortization of the deferred acquisition cost asset for all insurance policies issued that year. That rate is
based on the new money yields that we expect to earn on cash flow received in the future from policies of that issue
year and cannot be changed. The discount rate used for policies issued in the current year has no impact on the in
force policies issued in prior years as the rates of all prior issue years are also locked in. As such, the overall
discount rate for the entire in force block of 5.8% is a weighted average of the discount rates being used from all
issue years. Changes in the overall weighted-average discount rate over time are caused by changes in the mix of
the reserves and the deferred acquisition cost asset by issue year on the entire block of in force business. Business
issued in the current year has very little impact on the overall weighted-average discount rate due to the size of our
in force business.
34
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Since actuarial discount rates are locked in for life on essentially all of our business, benefit reserves and deferred
acquisition costs are not affecte
d by interest rate fluctuations unless a loss recognition event occurs. Due to the
strength of our underwriting margins, we do not expect an extended low interest rate environment will cause a loss
recognition event.
ff
Informat
ff
ion about interest on net policy liabilities is shown in the following table.
Required Interest on Net Insurance Policy Liabilities
(Dollar amounts in thousands)
Required
Interest
Average Net
Insurance
Policy
Liabilities
Average
Discount
Rate
2021
Life and Health......................................................................................................... $
Annuity ......................................................................................................................
Total............................................................................................................................ $
Increase in 2021......................................................................................................
583,996
$
9,912,914
5.9 %
46,437
1,041,586
630,433
$ 10,954,500
4.5
5.8
5.8 %
4.7 %
2020
Life and Health......................................................................................................... $
Annuity ......................................................................................................................
Total............................................................................................................................ $
Increase in 2020......................................................................................................
548,066
$
9,391,680
5.8 %
47,868
1,068,859
595,934
$ 10,460,539
4.5
5.7
4.8 %
3.9 %
2019
Life and Health......................................................................................................... $
Annuity ......................................................................................................................
Total............................................................................................................................ $
Increase in 2019......................................................................................................
518,623
$
8,947,308
5.8 %
49,925
1,120,812
568,548
$ 10,068,120
4.5
5.6
3.9 %
3.3 %
35
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Financing costs for the investment segment consist primarily of interest on our various debt instruments. The table
below presents the components of financing costs and reconciles interest expense per the Consolidated Statementstt
of Operations.
Analysis of Financing Costs
(Dollar amounts in thousands)
Interest on funded debt .................................................................................................... $
Interest on term loan.........................................................................................................
Interest on short-term debt ..............................................................................................
Other....................................................................................................................................
2021
2020
2019
78,183
$
73,157
$
—
5,270
33
4,193
9,302
52
69,844
3,262
11,165
35
Financing costs ........................................................................................................ $
83,486
$
86,704
$
84,306
In 2021, financing costs decreased 4% compared with prior year primarily due to rates on the short-term debt. The
interest on funded debt was higher than the prior year as a result of the 2.15% Senior Note issued in August 2020.
section of this report and in Note
ff
More informat
11—Debt.
ion on our debt transactions are disclosed in the Financial Conditiontt
Realized
Gains and Losses. Our life and health insurance companies collect premium income from policyholders
ll
for the eventual payment of policyholder benefits, sometimes paid many years or even decades in the future. Since
benefits are expected to be paid in future periods, premium receipts in excess of current expenses are invested to
provide for these obligations. For this reason, we hold a significant investment portfolioff
as a part of our core
insurance operations. This portfolio consists primarily of high-quality fixed maturities containing an adequate yield to
provide for the cost of carrying these long-term insurance product obligations. As a result, fixed maturities are
generally held for long periods to support the liabilities. Expected yields on these investments are taken into account
when setting insurance premium rates and product profitability expectations.
Despite our intent to hold fixed maturity investments forff
a long period of time, investments are occasionally sold,
exchanged, called, or experience a credit loss event, resulting in a realized gain or loss. These sales are often in
to maximize risk-adjusted, capital-adjusted returns.
response to deterioration in credit quality of the issuer in effort
We do not engage in trading investments forff
gains or losses, which occur in protecting the portfolioff
ff
or its yield or which result from events that are beyond our control, are only secondary to our core insurance
operations of providing insurance coverage to policyholders. In a bond exchange offer
, bondholders may consent to
exchange their existing bonds for another class of debt securities. The Company also has investments in certain
limited partnerships, held under the fair value option, with fair value changes recognized in Realized gains (losses)
in the Consolidated Statett ments ott
profit. Therefore,
tt
f Operat
ions.
O
ff
ff
Realized gains and losses can be significant in relation to the earnings from core insurance operations, and as a
result, can have a material positive or negative impact on net income. The significant fluctuations caused by gains
and losses can cause period-to-period trends of net income that are not indicative of historical core operating results
or predictive of the future trends of core operations. Accordingly, they have no bearing on core insurance operations
or segment results as we view operations. For these reasons, and in line with industry practice, we remove the
effect
s of realized gains and losses when evaluating overall insurance operating results.
ff
36
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
lowing table summarizes our tax-effected realized gains (losses) by component for each of the three years
The folff
ended December 31, 2021.
Analysis of Realized Gains (Losses), Net of Tax
per share data)
(Dollar amounts in thousands, except forff
Year Ended December 31,
2021
2020
2019
Amount
Per
Share
Amount
Per
Share
Amount
Per
Share
Fixed maturities:
Sales............................................................................ $ (8,100) $
Other(1) ........................................................................
Provision for credit losses........................................
35,684
2,337
Fair value option—change in fair value .........................
Other investments .............................................................
Realized investment gains (losses) .............
18,105
6,194
54,220
Loss on redemption of debt .............................................
(7,358)
Total realized gains (losses) .......................... $ 46,862
(0.07)
$
0.45
(0.08) $ (28,844) $
(0.27) $ (1,933) $
(0.02)
0.34
0.02
0.18
0.06
0.52
11,712
(2,643)
826
17,034
(1,915)
(501)
0.11
(0.03)
0.01
0.16
17,223
—
992
9
(0.02)
16,291
—
—
0.16
—
0.01
—
0.15
—
$ (2,416) $
))
)
((
(
((
(0.02) $ 16,291
(
))
)
$
0.15
(1) During the three years ended December 31, 2021, 2020, and 2019, the Company recorded $109.2 million, $219.8 million and $243.2 million
of exchanges of fixed maturity securities (noncash transactions) that resulted in $19.9 million, $6.2 million, and $16.2 million, respectively in
realized gains (losses), net of tax.
ii
Investment Acquisiti
ons. Globe Life's investment policy calls for investing primarily in investment grade fixed
maturities that meet our quality and yield objectives. We generally invest in securities with longer maturities because
they more closely match the long-term nature of our policy liabilities. We believe this strategy is appropriate since
our expected future cash flows are generally stable and predictable and the likelihood that we will need to sell
invested assets to raise cash is low.
During calendar years 2019 through 2021, Globe Life invested predominately in fixed maturity securities, primarily in
corporate and municipal bonds with longer-term maturities. The following table summarizes selected informat
ion for
fixed maturity investments. The effecti
ve annual yield shown is based on the acquisition price and call features, if
any, of the securities. For non-callable bonds, the yield is calculated to maturity date. For callable bonds acquired at
a premium, the yield is calculated to the earliest known call date and call price after acquisition ("first call date"). For
all other callable bonds, the yield is calculated to maturity date.
ff
ff
Fixed Maturity Acquisitions Selected Information
(Dollar amounts in thousands)
Cost of acquisitions(1):
Investment-grade corporate securities ............................................................... $
Investment-grade municipal securities ...............................................................
Other investment-grade securities.......................................................................
10,465
Total fixed maturity acquisitions ............................................................. $ 1,011,347
Year Ended December 31,
2021
2020
2019
566,400
$
686,844
$
922,927
434,482
543,088
34,171
627,967
10,483
$ 1,264,103
$ 1,561,377
ff
Effective
annual yield (one year compounded)(2) .................................................
Average life (in years to next call) ..........................................................................
Average life (in years to maturity)...........................................................................
Average rating............................................................................................................
3.39%
21.7
31.7
A+
3.73%
15.8
26.3
A
4.47%
18.7
29.4
A
(1) Fixed maturity acquisitions included unsettled trades of $7 million in 2021, $2 million in 2020 and $8 million in 2019.
(2) Tax-equivalent basis, where the yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable
securities.
37
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
For investments in callable bonds, the actual
life of the investment will depend on whether the issuer calls the
investment prior to the maturity date. Given our investments in callable bonds, the actual average life of our
investments cannot be known at the time of the investment. Absent sales and "make-whole calls," however, the
average life will not be less than the average life to next call and will not exceed the average life to maturity. Data for
both of these average life measures is provided in the above chart.
During 2020 and 2021, acquisitions consisted of securities spanning a diversified range of issuers, industry sectors,
and geographical regions. All of the acquired securities were investment grade. In addition to the fixed maturity
acquisitions, Globe Life invested $258 million in other long-term investments in 2021 and $266 million in 2020.
These investments include primarily investment funds. See Note—4 for further discussion.
New cash flow available forf
investment has been primarily provided through our insurance operations, cash
received on existing investments, and proceeds from dispositions. While dispositions increase funds available forff
investment, as noted earlier in this discussion, they can also have a negative impact on investment income if the
proceeds from the dispositions are reinvested at lower yields than the bonds that were disposed. Dispositions were
$428 million in 2021 and $469 million in 2020.
Since fixed maturities represent such a significant portion of our investment portfolio,
discussion of portfolio composition will
focus on fixed maturities. See a breakdown of
investments in Other Investment Information within Note 4—Investments.
the remainder of
the
the Company's other
Selected informat
ff
ion concerning the fixed maturity portfolio is as follows:
ff
Fixed Maturity Portfolio Selected Information
Average annual effective
ff
yield(1) ........................................................................................................
Average life, in years, to:
Next call(2) .......................................................................................................................................
Maturity(2) ........................................................................................................................................
Effective
ff
duration to:
Next call(2,3) .....................................................................................................................................
Maturity(2,3) ......................................................................................................................................
At December 31,
2021
5.17%
15.7
19.0
10.6
12.2
2020
5.28%
16.2
19.0
11.0
12.3
(1) Tax-equivalent basis. The yield on tax-exempt securities is adjusted to produce a yield equivalent to the pretax yield on taxable securities.
(2) Globe Life calculates the average life and duration of the fixed maturity portfolio two ways:
(a) based on the next call date which is the next call date forf
(b) based on the maturity date of all bonds, whether callable or not.
callable bonds and the maturity date for noncallable bonds, and
(3) Effeff ctive duration is a measure of the price sensitivity of a fixed-income security to a particular change in interest rates.
38
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Creditdd Riskii
security types held in our fixed maturity portfolio at December 31, 2021 and 2020.
Sensitivity.yy The following tables summarize certain informat
ff
ion about the major corporate sectors and
Fixed Maturities by Sector
December 31, 2021
(Dollar amounts in thousands)
Below Investment Grade
Total Fixed Maturities
% of Total Fixed
Maturities
Amortized
Cost, net
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost, net
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
At
Amortized
Cost, net
At
Fair
Value
Corporates:
Financial
Insurance - life, health,
P&C.................................. $
57,470 $
3,825 $
(4,807) $
56,488
$ 2,345,116 $
513,844 $
(5,553) $ 2,853,407
Banks...............................
Other financial ................
26,980
97,800
614
547
—
27,594
983,317
(1,103)
97,244
1,240,340
Total financial..............
182,250
4,986
(5,910)
181,326
4,568,773
Utilities
Electric.............................
36,284
Gas and water................
—
Total utilities ................
36,284
3,888
—
3,888
—
—
—
40,172
1,388,094
—
543,297
40,172
1,931,391
Industrial - Energy
207,466
186,431
907,741
382,892
107,227
490,119
(1,635)
1,189,148
(2,161)
1,424,610
(9,349)
5,467,165
(395)
1,770,591
(617)
649,907
(1,012)
2,420,498
Pipelines..........................
85,222
11,051
(1,445)
94,828
918,746
203,324
(1,445)
1,120,625
Exploration and
production .......................
Oil field services.............
Refinery ...........................
33,316
4,890
—
—
—
—
—
—
—
38,206
530,336
105,604
(238)
635,702
—
—
49,778
89,032
13,653
24,199
—
—
63,431
113,231
Total energy ................
118,538
15,941
(1,445)
133,034
1,587,892
346,780
(1,683)
1,932,989
—
—
—
—
84,106
25,565
25,555
179,323
651,621
—
—
—
—
13,059
3,182
5,588
21,807
68,451
—
—
—
—
—
—
—
—
673,699
405,915
145,114
118,115
65,608
15,946
(50)
818,763
—
—
524,030
81,554
1,145,222
279,175
(50)
1,424,347
(2,697)
94,468
2,256,802
—
—
28,747
1,254,243
31,143
559,399
(3,429)
197,701
1,663,793
475,012
286,889
135,581
277,807
(3,397)
2,728,417
(589)
1,540,543
(38)
694,942
(9,288)
1,932,312
(13,481)
706,591
14,967,515
3,199,104
(25,406) 18,141,213
84
85
—
—
36,468
27,037
—
—
—
2,695,796
304,537
(8,203)
2,992,130
63,505
36,468
27,037
—
63,505
13,457
—
—
—
(414)
13,043
104,905
3,701
(430)
108,176
—
—
238
25
—
263
Total fixed maturities . $
701,546 $
95,488 $
(
(13,895) $ 783,139
(
)
)
$ 17,804,922 $ 3,534,404 $
(
(34,039) $21,305,287
(
)
)
(1)
Includes Government National Mortgage Association (GNMA).
Industrial - Basic
materials
Chemicals .......................
Metals and mining .........
Forestry products and
paper................................
Total basic materials..
Industrial - Consumer,
non-cyclical........................
Other industrials ...............
Industrial -
Transportation...................
Other corporate sectors...
Total corporates ..........
Other fixed maturities:
Government (U.S.,
municipal, and foreign) ....
Collateralized debt
obligations .........................
Other asset-backed
securities............................
Mortgage-backed
securities(1) ........................
13
6
7
26
8
3
11
5
3
—
1
9
4
2
—
6
13
7
3
9
13
6
7
26
8
3
11
5
3
—
1
9
4
3
—
7
13
7
3
9
15
—
1
14
—
1
—
100
—
100
39
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Fixed Maturities by Sector
December 31, 2020
(Dollar amounts in thousands)
Below Investment Grade
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized
Cost
Total Fixed Maturities
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
% of Total Fixed
Maturities
At
Amortized
Cost, net
At
Fair
Value
Corporates:
Financial
Insurance - life, health,
P&C ....................................
Banks .................................
Other financial...................
Total financial ................
Utilities
7,658 $
3,894 $
(10,788) $ 50,764
$ 2,275,843 $
563,349 $
(14,769) $ 2,824,423
27,014
114,919
199,591
15
271
(456)
26,573
993,946
(8,245) 106,945
1,134,414
259,489
193,975
(1,050)
1,252,385
(8,402)
1,319,987
4,180
(19,489) 184,282
4,404,203
1,016,813
(24,221)
5,396,795
Electric ...............................
50,663
Gas and water...................
—
Total utilities...................
50,663
6,289
—
6,289
— 56,952
1,438,796
—
—
536,664
— 56,952
1,975,460
476,744
131,851
608,595
(108)
1,915,432
—
668,515
(108)
2,583,947
Industrial - Energy
Pipelines ............................
85,327
1,624
(2,309)
84,642
923,756
187,851
(2,423)
1,109,184
Exploration and
production..........................
Oil field services ...............
Refinery..............................
Driller ..................................
1,902
104,719
5,980
(678) 110,021
555,796
121,940
(678)
677,058
—
—
—
—
—
—
—
18
—
—
1,920
49,799
89,371
1,902
13,613
22,793
—
—
—
18
63,412
112,164
1,920
Total energy...................
191,948
7,604
(2,969) 196,583
1,620,624
346,197
(3,083)
1,963,738
—
—
—
—
96,265
25,661
25,777
179,878
769,783
—
—
—
—
8,680
3,925
4,315
17,459
52,452
—
—
—
—
—
—
—
—
642,258
406,564
152,016
144,110
88,804
21,588
—
—
—
794,274
550,674
110,392
1,137,626
317,714
— 1,455,340
(1,903) 103,042
2,233,324
— 29,586
1,260,646
— 30,092
566,935
(3,595) 193,742
1,489,113
576,007
328,986
175,405
329,254
(2,070)
2,807,261
13
13
(6)
—
1,589,626
742,340
(4,142)
1,814,225
7
3
9
7
3
9
(27,956) 794,279
14,687,931
3,698,971
(33,630) 18,353,272
86
86
—
—
—
—
2,313,855
341,176
(1,256)
2,653,775
57,007
23,460
(8,869)
71,598
57,007
23,460
(8,869)
71,598
13,949
—
—
—
(2,727)
11,222
134,616
3,591
(3,778)
134,429
—
—
390
45
—
435
Total fixed maturities .... $
840,739 $
75,912 $
(
(39,552) $877,099
(
)
)
$ 17,193,799 $ 4,067,243 $
(
(47,533) $21,213,509
(
)
)
(1)
Includes GNMAs.
Industrial - Basic
materials
Chemicals..........................
Metals and mining ............
Forestry products and
paper ..................................
Total basic materials ....
Industrial - Consumer,
non-cyclical ..........................
Other industrials ..................
Industrial - Transportation..
Other corporate sectors .....
Total corporates .............
Other fixed maturities:
Government (U.S.,
municipal, and foreign).......
Collateralized debt
obligations ............................
Other asset-backed
securities ..............................
Mortgage-backed
securities(1) ...........................
13
6
7
26
9
3
12
5
3
—
1
—
9
4
2
1
7
13
6
6
25
9
3
12
5
3
—
1
—
9
4
3
1
8
13
—
1
13
—
1
—
100
—
100
40
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Corporate securities, which consist of bonds and redeemable preferred stocks, were the largest component of the
December 31, 2021 fixed maturity portfolio, representing 84% of amortized cost, net and 85% of fair value. The
is invested primarily in securities issued by the U.S. government and U.S. municipalities.
remainder of the portfolioff
The Company holds insignificant amounts in foref
ign government bonds, collateralized debt obligations, asset-
backed securities, and mortgage-backed securities. Corporate securities are diversified over a variety of industry
sectors and issuers. At December 31, 2021, the total fixed maturity portfolio consisted of 843 issuers.
Fixed maturities had a fair value of $21.3 billion at December 31, 2021, compared with $21.2 billion at December
31, 2020. The net unrealized gain position in the fixed-maturity portfolio decreased from $4.0 billion at December
31, 2020 to $3.5 billion at December 31, 2021 due to an increase in market rates during the period.
ff
For more informat
ion about our fixed maturity portfolio by component at December 31, 2021 and December 31,
2020, including a discussion of allowance for credit losses, an analysis of unrealized investment losses and a
schedule of maturities, see Note 4—Investments.
An analysis of the fixed maturity portfolio by a composite quality rating at December 31, 2021 and December 31,
2020, is shown in the following tables. The composite rating for each security, other than private-placement
securities managed by third parties, is the average of the security’s ratings as assigned by Moody’s Investor
Service, Standard & Poor’s, Fitch Ratings, and Dominion Bond Rating Service, LTD. The ratings assigned by these
four nationally recognized statistical rating organizations are evenly weighted when calculating the average. The
composite quality rating is created utilizing a methodology developed by Globe Life using ratings from the various
rating agencies noted above. The composite quality rating is not a Standard & Poor's credit rating. Standard &
Poor's does not sponsor, endorse or promote the composite quality rating and shall not be liable for any use of the
composite quality rating. Included in the following chart are private placement fixed maturity holdings of $538 million
at amortized cost, net of allowance forff
credit losses ($577 million at fair value) for which the ratings were assigned
by the third-party managers.
Fixed Maturities by Rating
At December 31, 2021
(Dollar amounts in thousands)
Amortized
Cost, net
% of
Total
Fair
Value
% of
Total
Average Composite
Quality Rating on
Amortized Cost, net
Investment grade:
AAA................................................................. $
AA ...................................................................
A ......................................................................
BBB+ ..............................................................
BBB.................................................................
BBB-................................................................
761,526
2,215,179
4,487,607
3,779,051
4,289,044
1,570,969
Total investment grade ..........................
17,103,376
Below investment grade:
BB ...................................................................
B ......................................................................
Below B ..........................................................
Total below investment grade ..............
537,064
128,402
36,080
701,546
4
$
867,728
13
25
21
24
9
96
3
1
—
4
2,412,947
5,584,588
4,616,977
5,174,667
1,865,241
20,522,148
583,608
136,026
63,505
783,139
4
11
26
22
24
9
96
3
1
—
4
$ 17,804,922
100
$ 21,305,287
100
Weighted average composite quality rating ......................................................................................
A-
BB-
A-
41
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Fixed Maturities by Rating
At December 31, 2020
(Dollar amounts in thousands)
Amortized
Cost
% of
Total
Fair
Value
% of
Total
Average Composite
Quality Rating on
Amortized Cost
Investment grade:
AAA................................................................. $
AA ...................................................................
A ......................................................................
BBB+ ..............................................................
BBB.................................................................
BBB-................................................................
713,053
1,657,270
4,566,999
3,634,583
4,137,099
1,644,056
Total investment grade ..........................
16,353,060
Below investment grade:
BB ...................................................................
B ......................................................................
Below B ..........................................................
Total below investment grade ..............
686,184
115,646
38,909
840,739
4
$
848,621
10
26
21
24
10
95
4
1
—
5
1,873,323
5,969,677
4,612,898
5,088,114
1,943,777
20,336,410
692,609
122,104
62,386
877,099
4
9
28
22
24
9
96
3
1
—
4
$ 17,193,799
100
$ 21,213,509
100
Weighted average composite quality rating ......................................................................................
A-
BB-
A-
The overall quality rating of the portfolioff
is A-, the same as year-end 2020. Fixed maturities rated BBB are 54% of
the total portfolio at December 31, 2021 compared with 55% at year-end 2020. While this ratio is high relative to our
peers, we have limited exposure to higher-risk assets such as derivatives, equities, and asset-backed securities.
Additionally, the Company does not participate in securities lending and has no off-balance
sheet investments as of
December 31, 2021. Of our fixed maturity purchases, BBB securities generally provide the Company with the best
risk-adjusted, capital-adjusted returns largely due to our ability to hold securities to maturity regardless of
fluctuations in interest rates or equity markets.
ff
An analysis of changes in our portfolio of below-investment grade fixed maturities at amortized cost, net of
allowance forff
credit losses is as follows:
Below-Investment Grade Fixed Maturities
(Dollar amounts in thousands)
Balance at beginning of period ....................................................................................................... $
Downgrades by rating agencies........................................................................................................
Upgrades by rating agencies.............................................................................................................
Dispositions ..........................................................................................................................................
Provision for credit losses ..................................................................................................................
Amortization and other........................................................................................................................
Year Ended
December 31,
2021
2020
840,739
$
—
(67,078)
(78,712)
2,959
3,638
674,155
230,334
(14,618)
(49,037)
(3,346)
3,251
Balance at end of period ................................................................................................................... $
701,546
$
840,739
42
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Our investment policy calls for investing primarily in fixed maturities that are investment grade and meet our quality
and yield objectives. Thus, any increases in below-investment grade issues are typically a result of ratings
downgrades of existing holdings. Below-investment grade bonds at amortized cost, net of allowance forff
credit
losses, were 12% of our shareholders’ equity, excluding the effect
of unrealized gains and losses on fixed maturities
as of December 31, 2021. Globe Life invests long term and as such, one of our key criterion in our investment
process is to select issuers that have the ability to weather multiple financial cycles.
ff
Market Risk Sensitivity. Globe Life's investment securities are exposed to interest rate risk, meaning the effect
of
changes in financial market interest rates on the current fair value of the Company’s investment portfolio. Since 94%
of the carrying value of our investments is attributable to fixed maturity investments and these investments are
is highly subject to market risk. Declines in market interest rates
predominately fixed-rate investments, the portfolioff
generally result in the fair value of the investment portfolioff
rising, and increases in interest rates cause the fair value
to decline. Under normal market conditions, we are not concerned about unrealized losses that are interest rate
driven since we would not expect to realize them. Globe Life does not intend to sell the securities prior to maturity
and, likely, will not be required to sell the securities prior to recovery of amortized cost. The long-term nature of our
insurance policy liabilities and strong operating cash-flow substantially mitigate any future need to liquidate portions
of the portfolio. The increase or decrease in the fair value of insurance liabilities and debt due to increases or
s the impact of rates on the investment portfolio. However, as is
decreases in market interest rates largely offset
permitted by GAAPAA , tPP hese liabilities are not recorded at fair value.
ff
ff
The following table illustrates the interest rate risk sensitivity of our fixed maturity portfolio at December 31, 2021
ff n interest rates (as represented by the U.S. Treasury
and 2020. This table measures the effect
curve) on the fair value of the fixed maturity portfolio. The data measures the change in fair value arising from an
immediate and sustained change in interest rates in increments of 100 basis points.
of a parallel shift i
ff
Market Value of Fixed Maturity Portfolio
(Dollar amounts in thousands)
Change in Interest Rates(1)
(200)
At December 31,
2021
2020
$
26,939,000
$
26,976,000
(100)
0
100
200
(1) In basis points.
23,916,000
21,305,000
19,045,000
17,082,000
23,874,000
21,214,000
18,926,000
16,953,000
43
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
OPERATING EXPENSES
Operating expenses are included in the "Corporate and Other" segment and are classified into two categories:
insurance administrative expenses and expenses of the Parent Company. Insurance administrative expenses
generally include expenses incurred after a policy has been issued. As these expenses relate to premium for a
given period, management measures the expenses as a percentage of premium income. The Company also views
stock-based compensation expense as a Parent Company expense. Expenses associated with the issuance of our
insurance policies are reflected as acquisition expenses and included in the determination of underwriting margin.
The following table is an analysis of operating expenses for the three years ended December 31, 2021.
Operating Expenses Selected Information
(Dollar amounts in thousands)
2021
% of
2020
% of
2019
% of
Premium
Amount
Premium Amount
Premium Amount
Insurance administrative expenses:
Salaries ............................................................................ $ 115,852
Other employee costs....................................................
41,841
Information technology costs........................................
Legal costs ......................................................................
Other administrative costs ............................................
47,923
15,494
50,521
Total insurance administrative expenses..................
271,631
Parent company expense ................................................
Stock compensation expense .........................................
Administrative settlements...............................................
Legal proceedings.............................................................
Non-operating expenses..................................................
9,553
30,272
—
8,139
2,434
Total operating expenses, per Consolidated
Statements of Operations ....................................... $ 322,029
2.8
1.0
1.2
0.4
1.2
6.6
$ 105,935
39,885
45,742
11,256
48,129
250,947
2.8
1.0
1.2
0.3
1.3
6.6
$ 102,862
34,947
42,927
10,286
49,299
240,321
9,891
35,892
—
3,275
1,033
10,260
44,843
400
8,358
643
$ 301,038
$ 304,825
2021
2020
2019
Amount
%
Amount
%
Amount
%
Total insurance administrative expenses increase
(decrease) over prior year................................................ $ 20,684
8.2
$ 10,626
4.4
$ 16,380
Total operating expenses increase (decrease) over
prior year.............................................................................
20,991
7.0
(3,787)
(1.2)
25,240
Total operating expenses increased 7% over the prior year period primarily due to an 8% increase in insurance
administrative expenses. Insurance administrative expenses increased primarily due to higher employee-related
expenses, including pension costs and informat
ion technology salaries. Pension expense increased due to the
lower discount rate used to determine net periodic benefit costs in 2021 as compared to 2020. The decrease in
stock-based compensation expense was primarily due to fewer performance
based equity awards in 2021 as
compared to the same period in 2020. Insurance administrative expenses as a percent of premium were in line with
2020.
ff
ff
44
GL 2021 FORM 10-K
2.8
1.0
1.2
0.3
1.4
6.7
7.3
9.0
GLOBE LIFE INC.
Management's Discussion & Analysis
SHARE REPURCHASES
Globe Life has an ongoing share repurchase program that began in 1986, and is reviewed with the Board of
by the Board of Directors. With no specified
ff
Directors by management quarterly and annually reaffirmed
authorization amount, we determine the amount of repurchases based on the amount of the excess cash flow at the
Parent Company, general market conditions, and other alternative uses. The majority of these purchases are made
from excess cash flow. Excess cash flow at the Parent Company is primarily comprised of dividends received from
the insurance subsidiaries less interest expense paid on its debt, dividends paid to Parent Company shareholders,
and other limited operating activities. Additionally, when stock options are exercised, proceeds from these exercises
and the resulting tax benefit are used to repurchase additional shares on the open market to minimize dilution as a
result of the option exercises. On August 4, 2021, the Board of Directors reauthorized the Parent Company’s share
repurchase program in amounts and with timing that management, in consultation with the Board, determines to be
in the best interest of the Company and its shareholders.
The following table summarizes share purchase activity for each of the last three years.
Analysis of Share Purchases
(Amounts in thousands)
Purchases with:
Shares
Amount
Shares
Amount
Shares
Amount
Share repurchase program ..................................
4,784
$ 455,030
4,459
$ 380,112
3,932
$ 350,080
Option proceeds......................................................
858
86,405
676
63,754
1,209
109,489
Total .....................................................................
5,642
$ 541,435
5,135
$ 443,866
5,141
$ 459,569
2021
2020
2019
Throughout the remainder of this discussion, share purchases refer only to those made from excess cash flow at
the Parent Company.
FINANCIAL CONDITION
Liquidity.dd
Liquidity provides Globe Life with the ability to meet on demand the cash commitments required to
support our business operations and meet our financial obligations. Our liquidity is primarily derived from multiple
sources: positive cash flow from operations, a portfolioff
facility,
commercial paper and Federal Home Loan Bank (FHLB).
of marketable securities, a revolving credit
e Subsidiaryii
Liquiditydd . The operations of our
Insuranc
insurance subsidiaries have historically generated
rr
substantial cash inflows in excess of immediate cash needs. Cash inflows for the insurance subsidiaries primarily
include premium and investment income. In addition to investment income, maturities and scheduled repayments in
the investment portfolioff
are cash inflows. Cash outflows from operations include policy benefit payments,
commissions, administrative expenses, and taxes. A portion of the excess cash inflows in the current year will
provide for the payment of future policy benefits and are invested primarily in long-term fixed maturities as they
better match the long-term nature of these obligations. Excess cash available from the insurance subsidiaries’
operations is generally distributed as a dividend to the Parent Company, subject to regulatory restrictions. The
dividends are generally paid in amounts equal to the subsidiaries’ prior year statutory net income excluding realized
capital gains. While the leading source of the excess cash is investment income, a significant portion of the excess
cash also comes from underwriting income due to our high underwriting margins and effect
ive expense control.
While the insurance subsidiaries routinely generate more operating cash inflows than cash outflows annually, the
companies also have the entire available-for-sale fixed maturity investment portfolioff
available to create additional
cash flows if required.
ff
r of our insurance subsidiaries became members of the FHLB of Dallas. FHLB membership
During the year, fouff
provides the insurance subsidiaries with access to various low cost collateralized borrowings and funding
agreements. While not a primary source of liquidity, the FHLB could provide the insurance subsidiaries with an
additional source of liquidity, if needed. Refer to Note 11—Debt for further details.
45
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
t Company Liquidity.t
An important source of Parent Company liquidity is the dividends from its insurance
Parenrr
subsidiaries. These dividends are received throughout the year and are used by the Parent Company to pay
dividends on common and preferred stock, interest and principal repayment requirements on Parent Company debt,
and operating expenses of the Parent Company.
Year Ended December 31,
(Amounts in Thousands)
Projected
2022
2021
2020
2019
Liquidity Sources:
Dividends from Subsidiaries............................................................. $
400,000
$
478,535
$
485,871
$
479,988
Excess Cash Flows ...........................................................................
285,000
370,120
387,606
374,232
ff
For more informat
ns section of
Note 12—Shareholders' Equity.t Although these restrictions exist, dividend availability from subsidiaries historically
has been more than sufficff
ion on the restrictions on the payment of dividends by subsidiaries, see the Restrictio
ient for the cash flow needs of the Parent Company.
tt
liquidity for
Additional sources of
intercompany
borrowings, public debt markets, term loans, and a revolving credit facility. At December 31, 2021, the Parent
Company had access to $119 million of invested cash, net intercompany receivables and other liquid assets. The
credit facility is discussed below.
the Parent Company are cash,
intercompany receivables,
rr
Borrowingii
Short-Term
s. An additional source of Parent Company liquidity is a revolving credit facility with a group
of lenders which allows unsecured borrowings and stand-by letters of credit up to $750 million, which could be
extended up to $1 billion. While Globe Life can request the extension, it is not guaranteed. Up to $250 million in
letters of credit can be issued against the facility. The facility is further designated as a back-up line of credit for a
commercial paper program under which commercial paper may be issued at any time, with total commercial paper
outstanding not to exceed the facility maximum less any letters of credit issued. As of December 31, 2021, we had
available $295 million of additional borrowing capacity under this facility, compared with $360 million a year earlier.
Interest charged on the commercial paper program resembles variable rate debt due to its short term nature. Globe
Life has consistently been able to issue commercial paper as needed during the three years ended December 31,
2021. As discussed in Note 11—Debt, on September 30, 2021, Globe Life amended the credit agreement dated
August 24, 2020. The five-year credit agreement will now mature on September 30, 2026. As of December 31,
2021, the Parent Company was in full compliance with all covenants related to the aforementioned debt.
As a part of the credit facility, Globe Life has stand-by letters of credits. These letters are issued among our
re captive reinsurer, and have no impact on company obligations as a whole.
subsidiaries, one of which is an offsho
Any future regulatory changes that restrict the use of off-sho
re captive reinsurers might require Globe Life to obtain
third-party financing, which could cause an insignificant increase in financing costs. On October 26, 2021, the letters
of credit were amended to reduce the amount outstanding from $135 million as of December 31, 2020 to $125
million at December 31, 2021.
ff
ff
The Parent Company expects to have readily available funds for 2022 and the foreseeable future to conduct its
operations and to maintain target capital ratios in the insurance subsidiaries through internally generated cash flow
and the credit facility. In the unlikely event that more liquidity is needed, the Company could generate additional
funds through multiple sources including, but not limited to, the issuance of debt, an additional short-term credit
nd Contingencies and the discussion
tt
to Note 6—Commit
ment
66
facility, and intercompany borrowing. Referff
surrounding the Company's obligations over the next five years.
s att
As noted above, the Parent Company had access to $119 million of liquid assets available as of December 31,
2021. This liquidity is available to the Company in the event additional funds are needed to support the targeted
capital levels within our insurance subsidiaries due to adverse impacts of COVID-19.
Consolidated Liquiditydd .yy Consolidated net cash inflows provided from continuing operations were $1.44 billion in
2021, compared with $1.48 billion in 2020. In addition to cash inflows from operations, our companies received
proceeds from maturities, calls, and repayments of fixed maturities in the amount of $311 million in 2021, compared
46
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
with $416 million in 2020. As noted under the caption Credit Facilitii y i
revolving credit facility. The insurance companies have no additional outstanding credit facilities.
t n Nii
ote 11, the Parent Company has in place a
Cash and short-term investments were $161 million at the end of 2021 compared with $203 million at the end of
2020. In addition to these liquid assets, the entire $21.3 billion (fair value at December 31, 2021) portfolio of fixed
income securities is available forf
sale in the event of an unexpected need. Approximately 97% of our fixed income
securities are publicly traded, freely tradable under SEC Rule 144, or qualified for resale under SEC Rule 144A. We
generally expect to hold fixed income securities to maturity, and even though these securities are classified as
sale, we have the ability and intent to hold any securities until recovery or maturity. Our strong cash
available forff
flows from operations, ongoing investment maturities, and credit line availability make any need to sell securities for
liquidity highly unlikely.
Capital Resources. The Parent Company's capital structure consists of short-term debt (the commercial paper
facility and current maturities of long-term debt), long-term debt, and shareholders’ equity.
Debt: The carrying value of the long-term debt was $1.5 billion at December 31, 2021, which decreased from $1.7
billion a year earlier. A complete analysis and description of long-term debt issues outstanding is presented in Note
11—Debt.
p
Subsidiary Capitaltt
: The National Association of Insurance Commissioners (NAIC) has established a risk-based
y
factor approach for determining threshold risk-based capital levels for all insurance companies. This approach was
companies that may require regulatory attention. A Risk-
designed to assist the regulatory bodies in identifying
Based Capital (RBC) ratio is typically determined by dividing adjusted total statutory capital by the amount of risk-
based capital determined using the NAIC’s factors. If a company’s RBC ratio approaches two times the RBC
amount, the company must file a plan with the NAIC for improving their capital
is commonly
referred to as “Company Action Level” RBC). Companies typically hold a multiple of the Company Action Level RBC
depending on their particular business needs and risk profile.
levels (this level
ff
Our goal is to maintain statutory capital within our insurance subsidiaries at levels necessary to support our current
ratings. For 2021, Globe Life has targeted a consolidated Company Action Level RBC ratio of 300% to 320%. The
to support its current ratings, given
Company concludes that this capital level is more than adequate and sufficient
the nature of its business and its risk profile. As of December 31, 2021, our consolidated Company Action Level
RBC ratio was 315% compared with 309% in prior year.
ff
In August 2021, the NAIC fully adopted new and expanded C-1 investment factors. The adoption of these factors
resulted in higher amounts of required capital related to our investment portfolio. In addition to the expanded C-1
factors, additional capital was needed by the end of the year to support higher sales levels, growth of our in-force
business, higher COVID-19 net life claims, and the acquisition of Beazley Benefits. The Parent Company is
committed to maintaining the targeted consolidated RBC ratio at its insurance subsidiaries and has suffiff cient
liquidity available to provide additional capital if necessary.
ff
Shareholder's Equitytq y:yy As noted under the caption Analysis of Share Purchases within this report, we have an
ongoing share repurchase program.
Globe Life has continually increased the quarterly dividend on its common shares over the past three years.
Year Ended December 31,
Projected
2022
2021
2020
2019
Quarterly dividend by annual year ..................................................... $
0.2075
$
0.1975
$
0.1875
$
0.1725
Shareholders’ equity was $8.6 billion at December 31, 2021, compared with $8.8 billion at December 31, 2020, a
decrease of $128 million or 1%. Since December 31, 2020, shareholders’ equity was reduced by $409 million due to
after-tax unrealized losses in the fixed-maturity portfolio as interest rates increased over the period offset
by $745
million of net income during this period. In addition, shareholders' equity was reduced by $455 million in share
ff
47
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
purchases under the repurchase program and an additional $86 million in share purchases to offset
stock option exercises.
ff
the dilution from
We plan to use excess cash available at the Parent Company as effiff ciently as possible in the future. Possible uses
of excess cash flow include, but are not limited to, share repurchases, acquisitions, increases in shareholder
dividends, investment in securities, or repayment of short-term debt. We will determine the best use of excess cash
after ensuring that targeted capital
levels are maintained in our insurance subsidiaries. If market conditions are
favorable, we currently expect that share repurchases will continue to be a primary use of those funds.
ff
Policies, the Company will adopt ASU 2018-12, Financial Services–
As discussed in Note 1—Significant
Accountingtt
Insurance (Topic 944): Targeted Improvementstt
ve on
for Long-Duration Contracts
to the Accountingtt
January 1, 2023. The accounting adoption will have no economic impact on the cash flows of our business nor
influence our business model of providing basic protection oriented products to the underserved and low to middle-
income market. In addition, the adoption will not impact our capital management philosophies. It will, however,
modifyff
net income and net
operating income to increase under the new standard primarily due to the significant reduction in DAC amortization
in the near or intermediate term. With respect to equity, we anticipate a significant decrease as a result of the
through AOCI at
requirement to use current discount rates to remeasure the policy liabilities and record the offset
adoption. Since current rates (upper-medium grade) are lower than the locked-in rates assumed in valuing our
policy liabilities, we will have unrealized interest rate loss recognized through AOCI.
the timing of when profits emerge on our insurance policies. We are anticipating GAAPAA
(LDTI)TT , effecti
ff
tt
ff
We maintain a significant available-for-sale fixed maturity portfolio to support our insurance policy liabilities. Current
accounting guidance requires that we revalue our portfolio to fair market value at the end of each accounting period.
The period-to-period changes in fair value, net of their associated impact on deferred acquisition costs and income
tax, are reflected directly in shareholders’ equity. Changes in the fair value of the portfolioff
can result from changes in
market rates.
While a majority of invested assets are revalued, accounting rules do not permit interest-bearing insurance policy
liabilities to be valued at fair value in a consistent manner as that of assets, with changes in value applied directly to
shareholders’ equity. Due to the size of our policy liabilities in relation to our shareholders’ equity, an inconsistency
impact on the reported value of shareholders’ equity.
exists in measurement, which may have a material
Fluctuations in interest rates cause undue volatility in the period-to-period presentation of our shareholders’ equity,
capital structure, and financial ratios. Due to the long-term nature of our fixed maturities and liabilities and the strong
cash flows consistently generated by our insurance subsidiaries, we have the intent and ability to hold our securities
to maturity. As such, we do not expect to incur losses due to fluctuations in market value of fixed maturities caused
by market rate changes and temporarily illiquid markets. Accordingly, our management, credit rating agencies,
lenders, many industry analysts, and certain other financial statement users prefer to remove the effect
of this
accounting rule when analyzing our balance sheet, capital structure, and financial ratios.
ff
48
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
The folff
lowing table presents selected data related to our capital resources. Additionally, the table presents the effect
of this accounting guidance on relevant line items, so that investors and other financial statement users may
determine its impact on Globe Life's capital structure. Excluding the effect
of unrealized gains and losses on the
fixed maturity portfolio from shareholders' equity is considered non-GAAP. Below we include the reconciliation to
GAAPAA .
ff
ff
Selected Financial Data
(Dollar amounts in thousands, except per share data)
At
December 31, 2021
December 31, 2020
December 31, 2019
GAAP
Fixed maturities................................... $ 21,305,287
Deferred acquisition costs(2)..............
Total assets..........................................
29,768,048
4,914,728
Effect of
Accounting
Rule
Requiring
Revaluation(1)
Effect of
Accounting
Rule
Requiring
Revaluation(1)
Effect of
Accounting
Rule
Requiring
Revaluation(1)
GAAP
GAAP
$ 3,500,365
$ 21,213,509
$ 4,019,710
$ 18,907,147
$ 2,491,371
(4,327)
4,595,444
(5,955)
4,341,941
(7,488)
3,496,038
29,046,731
4,013,755
25,977,460
2,483,883
Short-term debt ...................................
479,644
Long-term debt....................................
1,546,494
—
—
Shareholders' equity...........................
8,642,806
2,761,870
254,918
1,667,886
8,771,092
—
—
3,170,866
298,738
1,348,988
7,294,307
—
—
1,962,268
Book value per diluted share ............
Debt to capitalization(3).......................
85.97
19.0 %
27.47
(6.6)%
83.19
18.0 %
30.07
(7.6)%
66.02
18.4 %
17.76
(5.2)%
Diluted shares outstanding................
Actual shares outstanding.................
100,535
99,567
105,429
103,797
110,494
107,720
(1) Amount added to (deducted from) comprehensive income to produce the stated GAAP item, per accounting rule ASC 320-10-35-1.
(2) Includes the value of business acquired (VOBA).
(3) Globe Life's debt covenants require that the effecff
t of this accounting rule be removed to determine this ratio. This ratio is computed by
dividing total debt by the sum of total debt and shareholders’ equity.
cial Strengrr
Finanii
Poor’s and A. M. Best. The folff
December 31, 2021.
th Ratingii
s. The financial strength of our major insurance subsidiaries is rated by Standard &
lowing table presents these ratings for our five largest insurance subsidiaries at
Liberty National Life Insurance Company............................................................................
Globe Life And Accident Insurance Company.....................................................................
United American Insurance Company..................................................................................
American Income Life Insurance Company.........................................................................
Family Heritage Life Insurance Company of America........................................................
Standard
& Poor’s
AA-
AA-
AA-
AA-
NR
A.M.
Best
A
A
A
A
A
A.M. Best states that it assigns an A (Excellent) rating to insurance companies that have, in its opinion, an excellent
ability to meet their ongoing insurance obligations.
The AA financial strength rating category is assigned by Standard & Poor’s Corporation (S&P) to those insurers
which have very strong capacity to meet its financial commitments which differs
from the highest-rated insurers only
to a small degree. An insurer rated A has strong capacity to meet its financial commitments but it is somewhat more
of changes in circumstances and economic conditions than insurers in higher-
susceptible to the adverse effects
rated categories. The plus sign (+) or minus sign (-) shows the relative standing within the major rating category.
ff
ff
49
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
OTHER ITEMS
Litigatt
tion. For more inforff mation concerning litigation, please refer to Note 6—Commitment
tt
stt and Continii gencies.
CRITICAL ACCOUNTING POLICIES
Application of Critical Accounting Estimates. The preparation of financial statements in conformit
y with GAAPAA
requires the application of accounting policies that often involve a significant degree of judgment. Management
reviews these key estimates and assumptions used in the preparation of financial statements on a timely basis. If
management determines that modifications are necessary due to current facts and circumstances, the Company’s
results of operations and financial position as reported in the consolidated financial statements could possibly
change significantly.
ff
The following accounting policies are deemed critical to the preparation of the financial statements and include
accounting estimates that management believes are most subjective or have complex judgments.
Future Policyc Benefitff s.tt Due to the long-term nature of insurance contracts, our insurance companies are liable for
policy benefit payments that will be made in the future. The liability for future policy benefits is determined by
standard actuarial procedures common to the life insurance industry. The accounting policies for determining this
liability are disclosed in Note 1—Signifiii cant Accountingtt
Policies.
Approximately 90% of our liabilities for future policy benefits at December 31, 2021 were traditional
insurance
liabilities where the liability is determined as the present value of future benefits less the present value of the portion
of the gross premium required to pay for such benefits. The assumptions used in estimating the future benefits for
this portion of business are set at the time of contract issue. These assumptions are “locked in” and are not revised
for the lifetime of the contracts, except where there is a premium deficiency, as defined in Note 1—Significant
Accountingtt
rr se, variability in the accrual of policy reserve
ff
ff
liabilities after
policy issuance is caused only by variability of the inventory of in force policies.
Policies under the caption Future Policy Benefits.
Otherwi
ff
The remaining portion of liabilities for future policy benefits pertains to business accounted for as deposit business,
where the recorded liability is the fund balance attributable to the benefit of policyholders as determined by the
policy contract at
there are no assumptions used to
determine the future policy benefit liability for deposit business.
the consolidated financial statement date. Accordingly,
Refer to Note 1—Significant
Accountingtt
with an effeff ctive date of January 1, 2023.
ff
Policies for discussion on the significant changes to future policy benefits
ies under the caption Deferred
Deferred Acquisition Costs. Certain costs of acquiring new business are deferred and recorded as an asset.
Deferred acquisition costs consist primarily of sales commissions and other underwriting costs such as advertising
related to the successful
Accountingtt
Policll
in the Notes to Consolidated Financial Statements.
Additionally, the cost of acquiring blocks of insurance business or insurance business through the purchase of other
companies, known as the value of insurance acquired (VOBA), is included in deferred acquisition costs. Our policies
for accounting for deferred acquisition costs and the associated amortization are reported under the same caption in
Note 1—Significant
issuance of a new insurance contract as indicated in Note 1—Significant
Accountingtt
Acquisitiontt
Policies.
Coststt
ff
ff
ff
Over 99% of our deferred acquisition costs at December 31, 2021 were related to traditional products and are being
amortized over the premium-paying period in proportion to the present value of actual historic and estimated future
gross premiums. The projection assumptions for this business are set at
issue. These
assumptions are “locked-in” at that time and, except where there is a loss recognition issue, are not revised for the
lifetime of the contracts. Absent a premium deficiency, variability in amortization after policy issuance is caused only
by variability in premium volume. We have not recorded a deferred acquisition cost loss recognition event for assets
related to this business for any period in the three years ended December 31, 2021.
the time of contract
50
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
Less than 1% of deferred acquisition costs pertain to deposit business for which deferred acquisition costs are
amortized over the estimated lives of the contracts.
Policyc Claimll
s and Other Benefits Payable. This liability consists of known benefits currently payable and an
estimate of claims that have been incurred but not yet reported to us. The estimate of unreported claims is based on
prior experience and is made after careful evaluation of all informat
ion available to us. However, the factors upon
which these estimates are based can be subject to change from historical patterns. Factors involved include the
litigation environment, regulatory mandates, and the introduction of policy types for which claim patterns are not well
our health claims. Changes in these
established, and medical trend rates and medical cost inflation as they affect
estimates, if any, are reflected in the earnings of the period in which the adjustment is made. The Company
concludes that the estimates used to produce the liability for claims and other benefits, including the estimate of
unsubmitted claims, are the most appropriate under the circumstances. However, there is no certainty that the
resulting stated liability will be our ultimate obligation. At this time, we do not expect any change in this estimate to
have a material impact on earnings or financial position consistent with our historical experience. There were no
significant changes in the claims process in the current year.
ff
ff
Valuation of Fixedii
Maturities. We hold a substantial investment in high-quality fixed maturities to provide for the
funding of our future policy contractual obligations over long periods of time. While these securities are generally
expected to be held to maturity, they are classified as available for sale and are sold from time to time to maximize
risk-adjusted, capital-adjusted returns. We report this portfolio at fair value. Fair value is the price that we would
expect to receive upon sale of the asset in an orderly transaction. The fair value of the fixed maturity portfolio is
ed by changes in interest rates in financial markets. Because of the size of our fixed maturity portfolio
primarily affect
and the long average life, small changes in rates can have a significant effect
on the portfolio and the reported
financial position of the Company. This impact is disclosed in 100 basis point increments under the caption Market
Risk Sensitivit
in this report, the
yt
Company regards these unrealized fluctuations in value as having no meaningful impact on our actual financial
condition and, as such, we remove them from consideration when viewing our financial position and financial ratios.
in this report. However, as discussed under the caption Financial Conditiontt
tt
ff
ff
ff
At times, the values of our fixed maturities can also be affect
ed by illiquidity in the financial markets. Illiquidity would
contribute to a spread widening, and accordingly to unrealized losses, on many securities that we would expect to
be fully recoverable. Even though our fixed maturity portfolio is available for sale, we have the ability and intent to
hold the securities until maturity as a result of our strong and stable cash flows generated from our insurance
ion concerning the policies, procedures, classification levels, and other relevant
products. Considerable informat
data concerning the valuation of our fixed maturity investments is presented in Note 1—Significant
Accountingtt
in both notes. There were no
Policies and in Note 4—Investments under the captions Fairii Value Measurementstt
significant changes in the valuation process in the current year.
ff
ff
e for Creditdd Losses. We continually monitor our investment portfolioff
Investments: Allowancww
for investments
where fair value has declined below carrying value to determine if a credit loss event has occurred. When a credit
event does occur, an allowance for credit loss is recorded and the corresponding provision is recognized in the
Consolidated Income Statett ment in Realized Gains or Losses. Non-credit related fluctuations in the fair value are
Comprehensive Income. The policies and procedures that we use to evaluate and account for
recorded in Other
Policies and the discussions under the
allowance for credit losses are disclosed in Note 1—Significant
is made to make the best
captions Investments and Realized Gains and Losses in this report. While every effort
estimate of status and value with the information available regarding an allowance for credit loss, it is difficuff
lt to
predict the future prospects of a distressed or impaired security.
Accountingtt
tt
ff
ff
51
GL 2021 FORM 10-K
GLOBE LIFE INC.
Management's Discussion & Analysis
benefit pension plans. We maintain funded defined benefit plans covering most full-time employees. We
Definedii
also have an unfunded nonqualified defined benefit plan covering a limited number of officers.
Our obligations under
these plans are determined actuarially based on specified actuarial assumptions. In accordance with GAAP, an
expense is recorded each year as these pension obligations grow due to the increase in the service period of
at least in part,
employees and the interest cost associated with the passage of time. These obligations are offset,
by the growth in value of the assets in the funded plans. At December 31, 2021, our gross liability under these plans
was $779 million, but was offset
by assets of $598 million.
ff
ff
ff
The actuarial assumptions used in determining our obligations/expenses for pensions include: employee mortality
and turnover, retirement age, the expected return on plan assets, projected salary increases, and the discount rate
at which future obligations could be settled. Additionally, a corridor approach is used to amortize any unrecognized
gains or losses outside the corridor (the standard 10% of the greater of plan PBO and fair value assets) and have
an amortization service period of approximately nine years. These assumptions have an important effect
on the
pension obligation. A decrease in the discount rate will cause an increase in the pension obligation. A decrease in
projected salary increases will cause a decrease in this obligation. Small changes in assumptions may cause
significant differences
these plans. For example, a sensitivity analysis is presented below for
the impact of change in the discount rate and the long-term rate of return on assets assumed on our defined benefit
pension plans expense for the year 2021 and projected benefit obligation as of December 31, 2021.
in reported results forff
ff
ff
Discount Rate(2):
Assumption
Pension Assumptions
(Dollar amounts in thousands)
Change(1)
Impact on
Expense
Impact on
Projected Benefit
Obligation
Increase.............................................................................................................
25
$
(4,187) $
Decrease ...........................................................................................................
Expected Return(3):
Increase.............................................................................................................
Decrease ...........................................................................................................
(25)
25
(25)
4,442
(1,333)
1,333
(30,692)
32,660
—
—
(1) In basis points.
(2) The discount rate for determining the net periodic benefit cost was 2.92% for 2021. The discount rate used forf
determining the projeo cted
benefit obligation as of December 31, 2021 was 3.19%.
(3) The expected long-term return rate assumed was 6.67%, consistent with prior year. Management considers both historical and future yields
to determine the expected return.
The Company determines mortality assumptions through the use of published mortality tables that reflect broad-
based studies of mortality and published longevity improvement scales.
ff
The criteria used to determine the primary assumptions are discussed in Note 9—Postretirement Benefitff s.tt While we
have used our best efforts
to determine the most reliable assumptions, given the information available from
Company experience, economic data, independent consultants and other sources, we cannot be certain that actual
results will be the same as expected. The assumptions are reviewed annually and revised, if necessary, based on
more current information available to us. Note 9—Postretirement Benefitsff
ion about pension
plan assets, investment policies, and other related data. There were no significant changes in the assumptions in
the current year.
also contains informat
ff
52
GL 2021 FORM 10-K
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Inforff mation required by this item is fouff nd under the heading Market
rr
yt
Risk Sensitivit
tt
in Item 7 of this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements Index
Report of Independent Registered Public Accounting Firm (PCAOB No. 34)............................................
Consolidated Financial Statements: .................................................................................................................
Consolidated Balance Sheets at December 31, 2021, and 2020 ..........................................................
Consolidated Statements of Operations for each of
the three years in the period ended
December 31, 2021 ........................................................................................................................................
Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the
period ended December 31, 2021................................................................................................................
Consolidated Statements of Shareholders’ Equity forf
each of the three years in the period ended
December 31, 2021 ........................................................................................................................................
Consolidated Statements of Cash Flows for each of
the three years in the period ended
December 31, 2021 ........................................................................................................................................
Notes to Consolidated Financial Statements..............................................................................................
Page
54
56
57
58
59
60
61
53
GL 2021 FORM 10-K
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Globe Life Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Globe Life Inc. and subsidiaries (the
"Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive
income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended December 31,
2021, and the related notes and the schedules listed in the Index at Item 15 (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2021, in conformit
y with accounting principles generally accepted in
the United States of America.
ff
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on
tt — Integrated Framework (2013) issued by the Committee of Sponsoring
criteria established in Internal Control
Organizations of the Treadway Commission and our report dated February 23, 2022, expressed an unqualified
opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
the audit to obtain reasonable assurance about whether the financial statements are free of material
and performff
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing
procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of
the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
ff
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,
providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Investments in Fixeii d Maturitiestt
to Notes 1 and 4 to the Financialii Statementstt
Clasll sifiedff
as Availabl
ii
e for Sale — Significant Unobservable Inputs - Referff
Critirr cal Audit Matter Descriptiontt
Investments in fixed maturities classified as available for sale are reported at fair value in the financial statements.
The investments without readily determinable market values are valued using significant unobservable inputs such
as credit ratings and discount rates. The balance of investments without readily determinable market values was
$705 million as of December 31, 2021. These inputs involve considerable judgment by management.
54
GL 2021 FORM 10-K
We identified investments in fixed maturities classified as available for sale without readily determinable market
values as a critical audit matter because of the unobservable inputs used by management to estimate fair value.
Auditing these inputs required especially subjective judgment and required the involvement of our fair value
specialists to fully evaluate them.
How the Critirr cal Audit Matter Was Addressed in the Audit
Our audit procedures related to the unobservable inputs used by management to estimate the fair value of
investments in fixed maturities classified as available for sale included the following, among others:
• We tested the effecti
ff
veness of controls over investments in fixed maturities classified as available for sale,
including management’s controls over the determination of unobservable inputs and fair value.
• We tested the accuracy and completeness of underlying data used in the determination of the fair value
(e.g., investments owned at the balance sheet date and relevant security attributes).
• With the assistance of our fair value specialists, we developed independent estimates of fair value for a
selection of securities and compared our estimates to management’s estimates.
Future Policyc Benefitff stt and Amortiztt ationtt
Refer to Note 1 to the Finaii ncial Statemen
tt
of Deferred Acquisition Costs — Certainii Underlying
ts
l
Assumptions -
tt
Critical
Audit Matter Descriptiontt
The Company’s management sets assumptions in (1) recording a liability for policy benefit payments that will be
made in the future (future policy benefits) and (2) determining amortization of deferred acquisition costs. The most
significant assumptions include mortality, morbidity, and persistency. Assumptions are determined based upon
published studies and analysis of Company specific experience, adjusted for changes in exposure and other
relevant factors. Given the inherent uncertainty of these significant assumptions, auditing the development of such
assumptions involved especially subject
ive judgment.
b
How the Critical
tt
Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s judgments regarding the assumptions used in the development of
future policy benefits and the amortization of deferred acquisition costs included the following, among others:
• We tested the effecti
future policy benefits.
ff
veness of controls over the assumption development process and the valuation of
• We tested the underlying data used in the development of the assumptions as well as in the determination
of the liability for future policy benefits and the amortization of deferred acquisition costs.
• We evaluated management’s selected actuarial assumptions,
including testing the accuracy and
completeness of the supporting experience studies.
• With the assistance of our actuarial specialists, we evaluated management’s judgments regarding the
assumptions used in the development of future policy benefits and the amortization of deferred acquisition
costs.
• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the
audit.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
February 23, 2022
We have served as the Company’s auditor since 1999.
55
GL 2021 FORM 10-K
Globe Life Inc.
Consolidated Balance Sheets
(Dollar amounts in thousands, except per share data)
December 31,
2021
2020
Assets:
Investments:
Fixed maturities—available for sale, at fair value (amortized cost: 2021—$17,805,309;
2020—$17,197,145, allowance for credit losses: 2021— $387; 2020— $3,346) .................... $
21,305,287
$
21,213,509
Policy loans..........................................................................................................................................
589,634
584,379
Other long-term investments (includes: 2021—$640,263; 2020—$385,038 under the fair
value option) ........................................................................................................................................
Short-term investments......................................................................................................................
793,925
69,145
546,981
107,782
Total investments...........................................................................................................................
22,757,991
22,452,651
Cash........................................................................................................................................................
Accrued investment income ................................................................................................................
Other receivables..................................................................................................................................
92,163
251,307
487,443
94,847
248,991
474,180
Deferred acquisition costs ...................................................................................................................
4,914,728
4,595,444
Goodwill..................................................................................................................................................
Other assets...........................................................................................................................................
481,791
782,625
441,591
739,027
Total assets .................................................................................................................................... $
29,768,048
$
29,046,731
Liabilities:
Future policy benefits ........................................................................................................................... $
16,034,727
$
15,243,536
Unearned and advance premium.......................................................................................................
Policy claims and other benefits payable..........................................................................................
Other policyholders' funds ...................................................................................................................
65,472
412,940
98,935
61,728
399,507
97,968
Total policy liabilities.........................................................................................................................
16,612,074
15,802,739
Current and deferred income taxes ...................................................................................................
1,765,021
Short-term debt .....................................................................................................................................
479,644
Long-term debt (estimated fair value: 2021—$1,667,009; 2020—$1,871,754)..........................
1,546,494
Other liabilities.......................................................................................................................................
722,009
1,833,723
254,918
1,667,886
716,373
Total liabilities.................................................................................................................................
21,125,242
20,275,639
Commitments and Contingencies (Note 6)
Shareholders' equity:
Preferred stock, par value $1 per share—5,000,000 shares authorized; outstanding: 0 in
2021 and 2020 ......................................................................................................................................
—
—
Common stock, par value $1 per share—320,000,000 shares authorized; outstanding:
(2021—109,218,183 issued; 2020—113,218,183 issued) .............................................................
Additional paid-in-capital......................................................................................................................
Accumulated other comprehensive income (loss)...........................................................................
Retained earnings.................................................................................................................................
109,218
520,564
2,677,583
6,182,100
113,218
527,435
3,029,244
5,874,109
Treasury stock, at cost: (2021—9,650,845 shares; 2020—9,420,699 shares)...........................
(846,659)
(772,914)
Total shareholders' equity ............................................................................................................
8,642,806
8,771,092
Total liabilities and shareholders' equity.................................................................................... $
29,768,048
$
29,046,731
See accompanying Notes to Consolidated Financial Statements.
56
GL 2021 FORM 10-K
Globe Life Inc.
Consolidated Statements of Operations
(Dollar amounts in thousands, except per share data)
Year Ended December 31,
2021
2020
2019
Revenue:
Life premium................................................................................................................ $ 2,898,210
$ 2,672,804
$ 2,517,784
Health premium...........................................................................................................
1,201,676
1,141,097
1,077,346
Other premium ............................................................................................................
1
4
4
Total premium........................................................................................................
4,099,887
3,813,905
3,595,134
Net investment income ..............................................................................................
952,447
927,062
Realized gains (losses)..............................................................................................
Other income ...............................................................................................................
59,319
1,216
(4,371)
1,325
910,459
20,621
1,318
Total revenue .........................................................................................................
5,112,869
4,737,921
4,527,532
Benefits and expenses:
Life policyholder benefits ...........................................................................................
2,071,810
1,809,373
1,638,053
Health policyholder benefits......................................................................................
Other policyholder benefits .......................................................................................
758,745
29,061
733,481
30,030
687,764
31,532
Total policyholder benefits ...................................................................................
2,859,616
2,572,884
2,357,349
Amortization of deferred acquisition costs..............................................................
Commissions, premium taxes, and non-deferred acquisition costs ...................
Other operating expense ...........................................................................................
Interest expense .........................................................................................................
603,838
331,510
322,029
83,486
575,770
304,841
301,038
86,704
551,726
298,047
304,825
84,306
Total benefits and expenses ...............................................................................
4,200,479
3,841,237
3,596,253
Income before income taxes..........................................................................................
912,390
896,684
931,279
Income tax benefit (expense) ........................................................................................
(167,431)
(164,911)
(170,397)
Income from continuing operations..........................................................................
744,959
731,773
760,882
Income (loss) from discontinued operations, net of tax.............................................
—
—
(92)
Net income ............................................................................................................ $
744,959
$
731,773
$
760,790
Basic net income (loss) per common share: ...............................................................
Continuing operations .................................................................................................. $
7.30
$
6.90
$
Discontinued operations ..............................................................................................
—
—
Total basic net income per common share .................................................. $
7.30
$
6.90
$
Diluted net income (loss) per common share: ............................................................
Continuing operations .................................................................................................. $
7.22
$
6.82
$
Discontinued operations ..............................................................................................
—
—
Total diluted net income per common share ............................................... $
7.22
$
6.82
$
6.97
—
6.97
6.83
—
6.83
See accompanying Notes to Consolidated Financial Statements.
57
GL 2021 FORM 10-K
Globe Life Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Dollar amounts in thousands)
Net income ....................................................................................................................... $
744,959
$
731,773
$
760,790
Year Ended December 31,
2021
2020
2019
Other comprehensive income (loss):
Investments:
Unrealized gains (losses) on fixed maturities:
Unrealized holding gains (losses) arising during period...................................
(492,267)
1,493,200
1,959,596
Other reclassification adjustments included in net income ..............................
Foreign exchange adjustment on fixed maturities recorded at fair value ......
(31,710)
4,632
32,809
2,330
(13,837)
1,151
Unrealized gains (losses) on fixed maturities..................................................
(519,345)
1,528,339
1,946,910
Unrealized gains (losses) on other investments......................................................
—
(18,306)
11,255
Total unrealized investment gains (losses).........................................................
(519,345)
1,510,033
1,958,165
Less applicable tax (expense) benefit............................................................
109,063
(317,111)
(411,213)
Unrealized gains (losses) on investments, net of tax .............................................
(410,282)
1,192,922
1,546,952
Deferred acquisition costs:
Unrealized gains (losses) attributable to deferred acquisition costs..................
Less applicable tax (expense) benefit ..............................................................
Unrealized gains (losses) attributable to deferred acquisition costs, net of
tax.................................................................................................................................
1,628
(342)
1,533
(321)
(2,218)
465
1,286
1,212
(1,753)
Foreign exchange translation:
Foreign exchange translation adjustments, other than securities......................
Less applicable tax (expense) benefit ..............................................................
Foreign exchange translation adjustments, other than securities, net of tax ...
Pension:
Amortization of pension costs..................................................................................
Plan amendments......................................................................................................
Experience gain (loss)...............................................................................................
Pension adjustments.................................................................................................
Less applicable tax (expense) benefit...............................................................
Pension adjustments, net of tax ..............................................................................
(4,955)
1,040
(3,915)
20,797
(4,565)
61,299
77,531
(16,281)
61,250
14,230
(2,986)
11,244
16,632
—
(43,169)
(26,537)
5,573
7,042
(1,479)
5,563
8,474
—
(40,636)
(32,162)
6,755
(20,964)
(25,407)
Other comprehensive income (loss)...............................................................................
(351,661)
1,184,414
1,525,355
Comprehensive income (loss) ............................................................................ $
393,298
$ 1,916,187
$ 2,286,145
See accompanying Notes to Consolidated Financial Statements.
58
GL 2021 FORM 10-K
Globe Life Inc.
Consolidated Statements of Shareholders' Equity
(Dollar amounts in thousands, except per share data)
Preferred
Stock
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Treasury
Stock
Total
Shareholders'
Equity
Year Ended December 31, 2019
,
Balance at December 31, 2018 ........... $
— $ 121,218
$ 524,414
$
319,475
$ 5,213,468
$ (763,398) $
5,415,177
Adoption of ASU 2016-02 .....................
Balance at January 1, 2019 ..............
Comprehensive income (loss) .............
Common dividends declared
($0.69 per share)....................................
Acquisition of treasury stock.................
Stock-based compensation ..................
Exercise of stock options ......................
Retirement of treasury stock ................
Balance at December 31, 2019......
Year Ended December 31, 2020
,
Adoption of ASU 2016-13 .....................
Balance at January 1, 2020 ..............
Comprehensive income (loss) .............
Common dividends declared
($0.75 per share)....................................
Acquisition of treasury stock.................
Stock-based compensation ..................
Exercise of stock options ......................
Retirement of treasury stock ................
Balance at December 31, 2020......
Year Ended December 31, 2021
,
Balance at January 1, 2021 ..............
Comprehensive income (loss) .............
Common dividends declared
($0.79 per share)....................................
Acquisition of treasury stock.................
Stock-based compensation ..................
Exercise of stock options ......................
Retirement of treasury stock ................
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(392)
—
(392)
121,218
524,414
319,475
5,213,076
(763,398)
5,414,785
—
—
—
—
—
—
—
—
25,132
—
(4,000)
(17,992)
1,525,355
760,790
(75,060)
—
—
2,286,145
(75,060)
—
(459,569)
(459,569)
(6,817)
26,528
(51,892)
135,055
(288,768)
310,760
44,843
83,163
—
117,218
531,554
1,844,830
5,551,329
(750,624)
7,294,307
—
—
—
(454)
—
(454)
117,218
531,554
1,844,830
5,550,875
(750,624)
7,293,853
—
—
—
—
—
—
—
—
14,410
—
(4,000)
(18,529)
1,184,414
731,773
(79,067)
—
—
1,916,187
(79,067)
—
(443,866)
(443,866)
(482)
(26,908)
21,964
75,001
(302,082)
324,611
35,892
48,093
—
113,218
527,435
3,029,244
5,874,109
(772,914)
8,771,092
113,218
527,435
3,029,244
5,874,109
(772,914)
8,771,092
(351,661)
744,959
—
—
—
—
—
—
—
—
12,103
—
(4,000)
(18,974)
—
—
393,298
(80,247)
(541,435)
(541,435)
(80,247)
—
—
(29,398)
18,169
99,224
(327,323)
350,297
30,272
69,826
—
8,642,806
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance at December 31, 2021...... $
— $ 109,218
$ 520,564
$
2,677,583
$ 6,182,100
$ (846,659) $
(
(
)
)
See accompanying Notes to Consolidated Financial Statements.
59
GL 2021 FORM 10-K
Globe Life Inc.
Consolidated Statement of Cash Flows
(Dollar amounts in thousands)
Year Ended December 31,
2020
731,773
2021
744,959
$
$
2019
760,790
Net income ........................................................................................................................ $
Adjustments to reconcile net income from continuing operations to cash
provided from continuing operations:
Loss (income) from discontinued operations, net of income taxes ....................
Increase (decrease) in future policy benefits.........................................................
Increase (decrease) in other policy benefits ..........................................................
Deferral of policy acquisition costs ..........................................................................
Amortization of deferred policy acquisition costs ..................................................
Change in current and deferred income taxes ......................................................
Realized (gains) losses .............................................................................................
Other, net.....................................................................................................................
Net cash provided from (used for) continuing operations ...............................
Net cash provided from (used for) discontinued operations...........................
Cash provided from (used for) operating activities ...............................................
—
854,770
18,144
(906,247)
603,838
71,919
(59,319)
109,616
1,437,680
—
1,437,680
Cash provided from (used for) investing activities:
Investments sold or matured:
Fixed maturities available for sale—sold.................................................................
Fixed maturities available for sale—matured or other redemptions ...................
Other long-term investments.....................................................................................
Total investments sold or matured......................................................................
116,656
310,991
36,346
463,993
Acquisition of investments:
Fixed maturities—available for sale.........................................................................
Other long-term investments.....................................................................................
Total investments acquired...................................................................................
Net (increase) decrease in policy loans..................................................................
Net (increase) decrease in short-term investments..............................................
Additions to properties...............................................................................................
Other investing activities ...........................................................................................
Investments in low-income housing interests ........................................................
Cash provided from (used for) investing activities ................................................
(1,004,384)
(258,296)
(1,262,680)
(5,255)
38,637
(38,244)
(56,700)
(53,121)
(913,370)
Cash provided from (used for) financing activities:
Issuance of common stock.............................................................................................
Cash dividends paid to shareholders ...........................................................................
Repayment of debt ..........................................................................................................
Proceeds from issuance of debt....................................................................................
Payment for debt issuance costs ..................................................................................
Net borrowing (repayment) of commercial paper.......................................................
Acquisition of treasury stock ..........................................................................................
Net receipts (payments) from deposit-type products.................................................
Cash provided from (used for) financing activities ...............................................
69,826
(80,043)
(300,000)
325,000
(7,687)
74,974
(541,435)
(64,238)
(523,603)
—
798,936
33,810
(822,985)
575,770
88,157
4,371
66,602
1,476,434
—
1,476,434
52,681
416,321
42,990
511,992
(1,262,434)
(266,230)
(1,528,664)
(8,887)
(69,497)
(41,756)
(7,051)
(37,867)
(1,181,730)
48,093
(78,192)
(386,875)
700,000
(5,844)
(34,445)
(443,866)
(72,928)
(274,057)
Effect
of foreign exchange rate changes on cash .........................................................
ff
Net increase (decrease) in cash ......................................................................................
Cash at beginning of year.................................................................................................
Cash at end of year............................................................................................................ $
(3,391)
(2,684)
94,847
92,163
$
(1,733)
18,914
75,933
94,847
$
92
661,567
15,900
(753,661)
551,726
68,588
(20,621)
62,194
1,346,575
17,299
1,363,874
79,108
840,222
5,134
924,464
(1,552,956)
(123,332)
(1,676,288)
(25,426)
34,003
(42,203)
32
(23,893)
(809,311)
83,163
(74,188)
(6,875)
—
—
(11,610)
(459,569)
(121,429)
(590,508)
(9,148)
(45,093)
121,026
75,933
See accompanying Notes to Consolidated Financial Statements.
60
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 1—Significant Accounting Policies
Business: (Globe Life), (the Company), refers to Globe Life Inc., an insurance holding company incorporated in
Delaware in 1979, and Globe Life Inc. subsidiaries and affiff liates. Globe Life Inc.'s direct or indirect primary
subsidiaries are Globe Life And Accident Insurance Company, American Income Life Insurance Company, Liberty
National Life Insurance Company, Family Heritage Life Insurance Company of America, and United American
Insurance Company. The underwriting companies are owned by their ultimate corporate parent, Globe Life Inc. (the
Parent Company).
Globe Life provides a variety of life and supplemental health insurance products and annuities to a broad base of
customers. The Company is organized into four reportable segments: life insurance, supplemental health insurance,
annuities, and investments.
Basis of Presentati
tt on: The accompanying consolidated financial statements of Globe Life have been prepared in
y with accounting principles generally accepted in the United States of America (GAAPAA ), under guidance
ff
conformit
issued by the Financial Accounting Standards Board (FASFF B). The preparation of consolidated financial statements
in conformit
the reported
ff
amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
to make estimates and assumptions that affect
requires management
y with GAAPAA
ff
tt
es: The preparation of consolidated financial statements in conformit
requires
Use of Estimat
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. See further
documentation in the significant accounting policies or the accompanying notes.
y with GAAPAA
ff
ff
ff
p
: The consolidated financial statements include the results of Globe Life Inc. and its
Principles of Consolidation
wholly-owned subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.
When Globe Life acquires a subsidiary or a block of business, the assets acquired and the liabilities assumed are
measured at fair value at the acquisition date. Any excess of acquisition cost over the fair value of net assets is
recorded as goodwill. Expenses incurred to effect
the acquisition are charged to earnings as of the acquisition date.
Upon acquisition, the accounts and results of operations are consolidated as of and subsequent to the acquisition
date.
ff
q
Acquisitiontt
: On August 1, 2021, the Company acquired Beazley Benefits, an operating unit of Beazley Insurance
Company, Inc. for $59.2 million. This business will enhance our ability to reach the worksite market. In conjunction
with this agreement, the Company also executed a 100% coinsurance agreement assuming the remaining inforce
business produced by the unit. The acquisition was accounted for under the purchase method of accounting as
required by GAAPAA . This guidance requires that the total purchase price be allocated to the assets acquired and
liabilities assumed based on their fair values at the acquisition date. The goodwill related to the purchase is due to
expected synergies as a result of combining operations with other factors. The results of operations since the
acquisition date have been consolidated. The cash flows associated with the purchase are recorded in the
Consolidated Statement of Cash Flows in "Other investing activities."
61
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value as of
August 1, 2021
Assets Acquired:
Trade name .................................................................................................................................................................... $
Value of Customer Relationships Acquired...............................................................................................................
Value of Distribution Acquired .....................................................................................................................................
Goodwill ..........................................................................................................................................................................
Ceding commission .........................................................................................................................................................
Total purchase price ................................................................................................................................................... $
300
5,200
11,000
40,200
56,700
2,500
59,200
In accordance with the applicable guidance, the Company is finalizing the estimation of the fair value of the acquired
assets and may do so up to one year. If any changes are deemed necessary to the preliminary estimates and
possibly goodwill, the Company will make an opening balance sheet adjustment.
ff
p
Operations
: When a component of Globe Life's business is sold or expected to be sold during the
Discontinued
tt
Operations, have been met,
ensuing year, the Company considers whether the criteria of ASC 205-20, Discontinued
ff hat has, or will have, a major
which includes evaluating if the disposal of a component represents a strategic shift t
effect
on the Company. If the disposal meets the criteria for discontinued operations, the assets and liabilities are
segregated and recorded in the Consolidated Balance Sheets as "Assets and Liabilities related to discontinued
operations" for all periods presented. If the carrying amount of the business exceeds its estimated fair value, a loss
is recognized. The results of operations for the discontinued component are reported in "Income from discontinued
operations, net of tax" in the Consolidated Statements ott
f OpeO rations for current and prior periods. Discontinued
operations are reported commencing in the period in which the business is either disposed of or meets the
accounting criteria for discontinued operations, including any gain or loss recognized on the sale or adjustment of
the carrying amount to the estimated fair
value less cost to sell.
f
tt
In 2016, Globe Life sold one of its operating segments, Medicare Part D. The financial results of this business are
Statementstt .
excluded from the Company's continuing operations including the Notes to the Consolidated Financial
The Company received final settlement related to the assets and liabilities of the discontinued operations in 2019.
ii
Investments: Globe Life classifies all of its fixed maturity investments as available for sale. Investments classified as
sale are carried at fair value with unrealized gains and losses, net of taxes, reflected directly in
available forff
investment
accumulated other comprehensive income (AOCI).
income" on the Consolidated Statements o
f OpeO rations. Gains and losses from sales, maturities, or other
redemptions of investments are recorded in "Realized gains (losses)". Interest income and prepayment fees are
recognized when earned. Premiums and discounts are amortized using the effecti
ve yield method. When amortized
cost of a callable debt security exceeds the first call price, the premium is amortized to the earliest call date.
Otherwise, the period of amortization or accretion generally extends from the purchase date to the maturity date.
Income from investments is recorded in "Net
tt
ff
"Other
"Policy loans", which represent loans provided to policyholders using cash values as collateral, are carried at unpaid
include limited partnerships, commercial mortgage loan
principal balances.
participations ("commercial mortgage loans"), equity securities, and real estate. Investments in equity securities are
reported at fair value with changes in fair value, net of taxes, reflected directly in "Realized gains (losses)" in the
Consolidated Statements o
less accumulated
depreciation. Depreciation is recorded on a straight-line basis over the estimated useful life.
Investments in real estate are reported at cost
long-term investments"
tt
f Operat
ions
O
.
tt
The investment funds consist of limited partnerships whereby the Company has a pro-rata share of ownership
ranging from less than 1% to 20%. For each investment, the Company has elected the fair value option, but would
have been otherwise accounted for as an equity method investment. The fair value option is assessed for each
individual investment and concluded at the inception of the investment.
62
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
ff
the economic performance
to determine if it is a variable interest
Each limited partnership investment is evaluated under applicable GAAPAA
entity (VIE) and would qualifyff
for consolidation. Only primary beneficiaries are required or allowed to consolidate
VIEs. The investments are not consolidated because the Company has no power to control the activities that most
significantly affect
the Company is not the primary
beneficiary of any of these interests. Globe Life's involvement is limited to its limited partnership interest in the
entities. The Company has not provided any other financial support to the entities beyond its commitments to fund
its limited partnership interests, and there are no arrangements or agreements with any of the interests to provide
other financial support. The maximum loss exposure relative to these interests is limited to their carrying value. The
Company has approximately 1% of total assets in low-income housing tax credits and certain limited partnerships
(investment funds) that qualifyff as unconsolidated VIEs.
of these entities and thereforeff
ff
The limited partnership investments are reported at the Company's pro-rata share of the investment fund's net asset
value or its equivalent (NAV),AA
as a practical expedient for fair value. Operating results provided by the partnerships
can be on a lag up to 3 months; however, the Company makes adjustments for any material transactions occurring
within the lag period. Changes in the net asset value are recorded in "Realized gains (losses)" on the Consolidated
iott ns. Distributions received from the funds arise from income generated by the underlying
Statements of Operatrr
investments as well as the liquidation of the underlying investments. Periodic distributions are recorded in net
investment income until cumulative distributions exceed our pro-rata share of cumulative operating earnings at
which point the distributions will reduce carrying value. Our maximum exposure to loss is equal to the outstanding
carrying value and future funding commitments. The Company had $234 million of capital called during the year
from existing investment funds, reducing our unfunded commitments. Our unfunded commitments were $450 million
as of December 31, 2021.
Commercial mortgage loan participations, a type of investment where the mortgage loan is shared among investors,
are accounted for as financing receivables. The commercial mortgage loans are managed by a third-party. The
Company purchased the legal rights to interests in commercial mortgage loans which are secured by transitional
properties such as hotels, retail, multiple family, or offices.
The commercial mortgage loans typically have a term of
three years with the option to extend up to two years. The commercial mortgage loans are recorded at unpaid
principal balance, net of unamortized origination fees and net of allowance for loan losses. Interest income, net of
the amortization of origination fees, is recorded in "Net investment income" under the effecti
ve yield method. Our
unfunded commitment balance to the commercial loan borrowers was $29 million as of December 31, 2021.
ff
ff
"Short-term investments" include investments in interest-bearing assets with original maturities of twelve months or
less. Gains and losses realized on the disposition of investments are determined on a specific identification basis.
63
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value Measurements,tt
: Globe Life measures the fair value of its "fixed maturities"
,
based on a hierarchy consisting of three levels which indicate the quality of the fair value measurements as
described below:
Investments in Securitiestt
•
•
•
Level 1—fair values are based on quoted prices in active markets for identical assets or liabilities
that the Company has the ability to access as of the measurement date.
Level 2—fair values are based on inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices
for similar assets or liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that are observable for the
asset or liability, or inputs that can otherwise be corroborated by observable market data.
Level 3—fair values are based on inputs that are considered unobservable where there is little, if
any, market activity for the asset or liability as of the measurement date. In this circumstance, the
Company has to rely on values derived by independent brokers or
internally-developed
assumptions. Unobservable inputs are developed based on the best information available to the
Company which may include the Company’s own data or bid and ask prices in the dealer market.
Net Asset Value—Certain investments, such as investment funds, that are measured at fair value using the net
asset value per share or its equivalent, as a practical expedient, have not been classified in the fair value hierarchy.
The net asset value is usually provided by general partners or managers.
The great majority of Globe Life's "fixed maturities" are not actively traded and direct quotes are not generally
determines the fair values of these securities after consideration of data provided
available. Management thereforeff
by third-party pricing services,
the
independent broker/dealers, and other resources. At December 31, 2021,
Company's investments in fixed maturities were primarily composed of the following significant security types:
corporate securities, state and municipal securities, U.S. government direct, guaranteed, and government-
sponsored enterprises securities. The remaining security types represented approximately 1% of the total in the
aggregate.
Approximately 97% of the fair value of "fixed maturities" reported at December 31, 2021 was determined using data
provided by third-party pricing services. Prices provided by these services are not binding offers,
but are estimated
exit values. Third-party pricing services use proprietary pricing models to determine security values by discounting
cash flows using a market-adjusted spread to a benchmark yield.
ff
For all asset classes within Globe Life's significant security types, third-party pricing services use a common
valuation technique to model the price of the investments using observable market data. The foundation for these
models consists of developing yield spreads based on multiple observable market inputs, including but not limited
to: benchmark yield curves, actual trading activity, new issue yields, broker-dealer quotes, issuer spreads, two-sided
markets, benchmark securities, bids, offers,
sector-specific data, economic data, and other inputs that are
corroborated in the market. Pricing vendors monitor and review their pricing data continuously with current market
and economic data feeds, augmented by ongoing communication within the dealer community.
ff
Using the observable market inputs described above, spreads to an appropriate benchmark yield are further
developed by the vendors for each security based on security-specific and/or sector-specific risk factors, such as a
security’s terms and conditions (coupon, maturity, and call features), credit rating, sector, liquidity, collateral or other
cash flow options, and other factors that could impact the risk of the security. Embedded repayment options, such
as call and redemption features, are also taken into account in the pricing models. When the spread is determined,
it is added to the security’s benchmark yield. The security's expected cash flows are discounted using this spread-
adjusted yield, and the resulting present value of the discounted cash flows is the evaluated price.
64
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
When third-party vendor prices are not available, the Company attempts to obtain valuations from other sources,
including but not limited to broker/dealers, broker quotes, and prices on comparable securities.
When valuations have been obtained for all securities in the portfolio, management reviews and analyzes the prices
to ensure their reasonableness, taking into account available and observable information. When two or more
valuations are available for a security and the variance between the prices is 10% or less, the close correlation
suggests similar observable inputs were used in deriving the price, and the mean of the prices is used. Securities
valued in this manner are classified as Level 2. When the variance between two or more valuations for a security
exceeds 10%, additional analysis is performed
to determine the most appropriate value for that security, using
resources such as broker quotes, prices on comparable securities, recent trades, and any other observable market
on the available valuations to determine if they can be corroborated within
data. Further review is performed
reasonable tolerance to any other observable evidence. If one of the valuations or the mean of the available
valuations for a security can be corroborated with other observable evidence, then the corroborated value is used
and reported as Level 2. The Company uses informat
techniques deemed appropriate for
determining the point within the range of reasonable fair value estimates that is most representative of fair value
under current market conditions. Valuations that cannot be corroborated within a reasonable tolerance are classified
as Level 3.
ion and analytical
ff
ff
ff
Globe Life invests in a portfolio of private placement fixed maturities that are not actively traded. This portfolio is
managed by third-parties. The portfolio managers provide valuations for the bonds based on a pricing matrix
utilizing observable inputs, such as the benchmark treasury rate and published sector indices, and unobservable
inputs such as an internally-developed credit rating. If observable inputs cannot be corroborated, the fair values are
classified as Level 3. Refer to Note 4—Investmentstt under the caption Quantitativett
about Level 3 Fair
Value Measurementstt .
Informat
iontt
ff
The fair values for each class of security and by valuation hierarchy level are indicated in Note 4—Investments
under the caption Fairii value measurements,tt
and Note 9—Postretirement Benefitff stt under the caption Pension
Assets.
ii
tt
tt
,
Financial
stt
Instrument
Fairii Value Measurements,tt Other
: Fair values for cash and cash equivalents, short-term
investments, short-term debt, receivables, and payables approximate carrying value. Cash and cash equivalents
are classified as Level 1. Fair values of commercial mortgage loans are determined based upon expected cash
flows discounted at an appropriate risk-adjusted rate and are classified as Level 3. The fair value of investments in
limited partnerships that provide low-income housing tax credits is based on discounted projected cash flows and
are classified as Level 3. Policy loans are an integral part of Globe Life's subsidiaries’ life insurance policies in force
and their fair values cannot be valued separately from the insurance contracts. Investment funds are based on net
asset value and are excluded from the fair value hierarchy.
The fair values of Globe Life's long and short term debt issues are based on the same methodology as investments
in fixed maturities. At December 31, 2021, observable inputs were available for these debt securities and as such
were classified as Level 2 in the valuation hierarchy. The fair value for each debt instrument as of December 31,
2021 is disclosed in Note 11—Debt.
As described in Note 9—Postretirement Benefitsff
, Globe Life maintains a nonqualified supplemental retirement plan.
Accordingly, the assets that support the liability for this plan are considered general assets of the Company. These
assets consist of the cash value of corporate-owned life insurance policies (COLI) and exchange traded funds
(ETFs). The fair value of the insurance cash values approximates carrying value. Fair values for the ETFs are
derived from direct quotes and are considered Level 1 in the fair value hierarchy.
p
): At the onset of the evaluation, the Company individually
Current Expected Credit Loss Reserve (fixed maturities)
assesses each fixed maturity, on a quarterly basis, to determine whether it intends to sell, or it is more likely than not
that it will be required to sell the security beforeff
recovery of its amortized cost basis. If either of the criteria are met,
the Company will write down the fixed maturity's amortized cost basis to fair value through "Realized gains
(losses)".
(
65
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
If neither of the aforeff mentioned criteria are met, the Company will evaluate whether the decline in fair value has
resulted from a credit event. The Company will evaluate many factors, as further described below, to determine the
present value of the expected cash flows. A credit loss occurs when the present value of the expected cash flows is
less than the amortized cost basis. This will result in the recording of an allowance for credit losses as a contra
asset account to the amortized cost basis with an offset
ting provision for credit losses in "Realized gains (losses)"
on the Consolidated Statett mentstt of Operations. Additionally, the CECL methodology includes a fair value floor where
between fair value and amortized cost.
the allowance for credit loss for a security cannot exceed the difference
When it is determined that there is not a credit loss, the decline in fair value is recognized in Other
comprehensive
tt
income.
ff
ff
All changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense.
Losses recorded to the allowance for credit losses are management's best estimate of the uncollectibility of principal
and interest of a fixed maturity.
The evaluation of Globe Life's securities for credit losses is a process that is undertaken at least quarterly and is
overseen by a team of investment and accounting professionals. The process for making this determination is highly
subjective and involves the careful consideration of many factors. The factors considered include, but are not limited
to:
•
•
•
•
•
The Company’s lack of intent to sell the debt security before recovery;
Whether it is more likely than not the Company will be required to sell prior to maturity;
The reason(s) for the credit related losses;
The financial condition of the issuer and the prospects for recovery in fair value of the security;
Expected future cash flows.
The relative weight given to each of these factors can change over time as facts and circumstances change. In
many cases, management believes it is appropriate to give more consideration to prospective factors than to
retrospective factors. Prospective factors that are given more weight include prospects for recovery, the Company’s
ability and intent to hold the security until anticipated recovery, and expected future cash flows.
Among the facts and informat
ff
ion considered in the process are:
•
•
•
•
•
•
•
•
•
Financial statements of the issuer
Changes in credit ratings of the issuer
The value of underlying collateral
News and informat
ff
ion included in press releases issued by the issuer
News and informat
ff
ion reported in the media concerning the issuer
News and informat
analysts
ff
ion published by or otherwise provided by securities, economic, or research
The nature and amount of recent and expected future sources and uses of cash
Default on a required payment
Issuer bankruptcy filings
The expected cash flows are determined using judgment and the best information available to the Company. Inputs
used to derive expected cash flows generally include expected default rates, current levels of subordination, and
estimated recovery rate. The discount rate utilized in the discounted cash flows is the effective
interest rate, which is
the rate of return implicit in the asset at acquisition.
ff
66
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
(
p
loans)
Current Expected Credit Loss Reserve (commercial mortgage
): The Company evaluates the performance and
g g
t
credit quality of the commercial mortgage loan portfolio at least on a quarterly basis, or as needed, by utilizing
local market conditions,
common metrics such as loan-to-value or debt-service ratios as well as covenants,
borrower quality, and underlying collateral. The fair value of the underlying collateral
is based on a third-party
appraisal of the property at origination of the loan. The fair value is assessed on an annual basis or more frequently
when a loan is materially underperforming,
30 days delinquent, or in technical default. The Company determines the
probability of estimated losses for the commercial mortgage loan portfolio on a pool basis each quarter and records
an allowance. The allowance for credit losses is based on estimates, historical experience, probability of loss, value
of the underlying collateral, and macro factors that affect
the collectability of the loan. Each loan within the pool is
assigned a risk rating (credit quality indicator) of low, medium, and high based on risk and expected future
A loan that is assigned as high risk would have a higher probability of a potential principal loss. The
performance.
assigned risk category and the estimated loss rate is adjusted each quarter for current and forecasted economic
factors management believes are relevant.
ff
ff
ff
If management determines that foreclosure of a particular property is probable, the Company may elect the practical
expedient for an individual mortgage loan to estimate the expected credit losses, which are based on the fair value
of the property less amortized cost, adjusted for selling and other associated costs. See Note 4 for current activity.
Cash: "Ca""
sh" consists of balances on hand and on deposit in banks and financial institutions.
tt
Accrued investment
investment portfolio,
accrued investment income that is deemed to be uncollectible related to the fixed maturities.
income: "Accrued investment income" consists of interest income or dividends earned on the
but which are yet to be received as of the balance sheet date. The Company will write-offff
ff
"Accrued investment income" also consists of interest income earned on the commercial mortgage loan portfolio,
but which is yet to be received as of the balance sheet date. Accrued investment income will be placed in
nonaccrual status at
the time the loan is 90 days delinquent or otherwise deemed to be uncollectible by
management. Any currently accrued investment income will subsequently be written off.ff As of December 31, 2021,
the accrued interest receivable for commercial mortgage loans was $389 thousand. Commercial mortgage loans
generally pay interest monthly, therefore accrued interest is typically for a period of less than 30 days.
As a practical expedient, the Company excludes the accrued investment income from the amortized cost basis of
the investment and separately reports it in another financial statement line item, "Accrued investment income."
tt
Additionally, the amount will be excluded from disclosures within Note 4—Invest
.
vv ments
Other
Receivables: Agent debit balances primarily represent commissions advanced to insurance agents, a
tt
common industry practice. These balances are repaid to the Company over time, generally one year, as the
premiums associated with the advanced commissions are collected by the Company and a portion of the agents'
commissions on such premiums are retained in order to repay the balances. The balances were $467 million at
December 31, 2021 and $456 million at December 31, 2020. When an agent sells a policy, commissions are
advanced to the agent, and the collection of the advance is made as long as the policy stays in force. While there is
a susceptibility to loss should an agent terminate or excessive policy lapses occur, the ability of the Company to
continue to collect an agent's commission streams over time from prior sales of policies reduces the Company's
exposure to loss.
The Company has a very low inherent risk with regards to the collection of agent debit balances and views these
balances as recoverable since they are, in aggregate, less than the estimated present value of future commissions
discounted at a conservative rate which includes assumptions for lapses and mortality. The Company’s security, or
collateral, is in the form of future commission streams collected over the life of the policies sold by the respective
agents, which ultimately revert to the Company in the event an agent is terminated. The Company evaluated the
agent debit balances on a pool basis to determine the allowance for credit losses, as the loans have similar
characteristics. A provision for credit losses will be recorded in "Realized gains (losses)" on the Consolidated
Statements of Operatrr
iott ns and the asset balance will be reflected in agent debit balances, net of allowance for credit
losses ("Other receivables"). Based on factors considered by management, there were no additional credit losses
67
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
recorded during the year ended December 31, 2021. As of December 31, 2021, the allowance for credit losses was
$1.2 million.
ff
q
Coststt
Acquisitiontt
Deferred
: Certain costs of acquiring new insurance business are deferred and recorded as an
asset. These costs are essential for the acquisition of new insurance business and are directly related to the
successful
issuance of an insurance contract including sales commissions, policy issue costs, and underwriting
costs. Additionally, deferred acquisition costs (DAC) include the value of business acquired (VOBA), which are the
costs of acquiring blocks of insurance from other companies or through the acquisition of other companies. These
costs represent the differe
nce between the fair value of the contractual insurance assets acquired and liabilities
assumed compared against the assets and liabilities for insurance contracts that the Company issues or holds
measured in accordance with GAAPAA .
ff
DAC and VOBA are amortized in a systematic manner which matches these costs with the associated revenues.
Policies other than universal life-type policies are amortized with interest over the estimated premium-paying period
of the policies in a manner which charges each year’s operations in proportion to the receipt of premium income.
Universal life-type policies are amortized with interest in proportion to estimated gross profits. The assumptions
used to amortize acquisition costs include interest, mortality, morbidity, and persistency, and are consistent with
those used to estimate the liability for future policy benefits. For interest-sensitive and deposit-type products, these
assumptions are reviewed on a regular basis and are revised if actual experience differs
significantly from original
expectations. For all other products, amortization assumptions are generally not revised once established.
ff
DAC and VOBA are subject to periodic recoverability and loss recognition testing to determine if there is a premium
deficiency. These tests evaluate whether the present value of future contract-related cash flows will support the
capitalized DAC and VOBA assets. These cash flows consist primarily of premium income, less benefits and
expenses. The present value of these cash flows, less the benefit reserve, is then compared with the unamortized
deferred acquisition cost balance. In the event the estimated present value of net cash flows is less, the deficiency
would be recognized by a charge to earnings and either a reduction of unamortized acquisition costs or an increase
. Refer to Note 5—Deferred
in the liability for future benefits, as described under the caption Future Policy Benefitsff
Acquisitiontt
Coststt .
ff
ii
Coststt
: Costs related to advertising are generally charged to expense as incurred. However, certain
Advertising
g
Direct
to Consumer advertising costs are capitalized when there is a reliable and demonstrated relationship
between total costs and future benefits that is a direct result of incurring these costs. Direct to Consumer advertising
costs consist primarily of the production and distribution costs of direct mail advertising materials, and when
capitalized are included as a component of DAC. Additionally, they are amortized in the same manner as other
DAC. Direct to Consumer advertising costs charged to earnings and included in other operating expense were
$10.0 million, $9.8 million, and $9.5 million in 2021, 2020, and 2019, respectively. Unamortized capitalized
advertising costs included within DAC were $1.4 billion at December 31, 2021 and $1.4 billion at December 31,
2020.
Goodwill: The excess cost of a business acquired over the fair value of net assets acquired is reported as goodwill.
In accordance with the guidance, goodwill is subject to impairment testing on an annual basis, or whenever potential
impairment triggers occur. Impairment testing involves the performance of a qualitative analysis, which involves
assessing current events and circumstances to determine if it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. In the event the fair value is less than the carrying value, further testing is
required to determine the amount of impairment, if any. If there is an impairment in the goodwill of any reporting unit,
it is written down and charged to earnings in the period of the test. Globe Life tests its goodwill annually as of June
30th for each of the years 2019 through 2021. The Company's goodwill was not impaired in any of those periods.
: Globe Life invests in limited partnerships that provide low-income
g
Low-Income Housing Tax Credit Interests
housing tax credits and other related federal income tax benefits to the Company. Globe Life holds passive interests
in limited partnerships that provide investment returns through the provision of tax benefits (principally from the
transfer of federal or state tax credits related to federal low-income housing). These investments are considered to
for consolidation. The carrying value of the Company's investment in these entities was
be VIEs and do not qualifyff
68
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
$328 million and $306 million at December 31, 2021 and 2020, respectively, and was included in "Other assets" on
the Consolidated Balance Sheets.tt As of December 31, 2021, Globe Life was obligated under future commitments of
$177 million, which are recorded in "Other liabilities". For guaranteed investments acquired prior to January 1, 2015,
the Company utilizes the effecti
ve-yield method of amortization, while the proportional method of amortization is
utilized for all non-guaranteed and guaranteed investments acquired on or after January 1, 2015. All amortization
expense is recorded in "Income tax benefit (expense)" on the Consolidated Statementstt of Operations
ff
tt
.
y
q p
ertrr yt and Equipment
Proprr
: Property and equipment, included in “Other assets,” is reported at cost less accumulated
p
depreciation. Depreciation is recorded primarily on the straight line method over the estimated useful lives of these
assets which range from three to ten years for equipment and fifteen to forty years for buildings and improvements.
Ordinary maintenance and repairs are charged to income as incurred. Impairments, if any, are recorded when
certain events and circumstances become evident that the fair value of the asset is less than its carrying amount.
Original cost of property and equipment was $378 million at December 31, 2021 and $350 million at December 31,
2020. Accumulated depreciation was $173 million at the end of 2021 and $164 million at the end of 2020.
Depreciation expense was $20 million in 2021, $17 million in 2020, and $16 million in 2019. Internally generated
software costs are expensed as incurred in the preliminary project phase and post-implementation phase, and are
capitalized during the application development stage. Additionally, implementation costs incurred in a hosting
arrangement that is a service contract are capitalized.
y
life-type products is
: The liability for future policy benefits for annuity and universal
Futurerr Policy Benefitsff
represented by policy account value. The liability for future policy benefits for all other life and health products,
approximately 90% of total liabilities for future policy benefits, is determined on the net level premium method. This
method provides for the present value of expected future benefit payments less the present value of expected future
net premiums, based on estimated investment yields, mortality, morbidity, persistency, and other assumptions which
were considered appropriate at the time the policies were issued. For limited-payment contracts, a deferred profit
liability is also recorded which causes profits to emerge over the life of the contract in proportion to the amount of
insurance in force.
Assumptions used for traditional life and health insurance products are based primarily on Company experience.
Assumptions for interest rates range from 2.5% to 7.0% for Globe Life's insurance companies with an overall
weighted average assumed rate of 5.7%. Mortality tables used for individual life insurance include various industry
tables and reflect modifications of a variety of generally accepted actuarial tables based on Company experience.
Morbidity assumptions for individual health are based on Company experience and industry data. Withdrawal and
termination assumptions are based on Globe Life's experience. Once established, assumptions for these products
are generally not changed. An additional provision is made on most products to allow for possible adverse deviation
from the assumptions. These estimates are reviewed annually and compared with actual experience. If it is
determined that existing contract liabilities, together with the present value of future gross premiums, will not be
sufficient
to cover the present value of future benefits and to recover unamortized deferred acquisition costs, then a
premium deficiency exists. Such a deficiency would be recognized immediately by a charge to earnings and either a
reduction of unamortized deferred acquisition costs or an increase in the liability for future policy benefits. From that
point forward, the liability for future policy benefits would be based on revised assumptions.
ff
Reinsurance: In the normal course of business, Globe Life insurance subsidiaries will enter into reinsurance
agreements to limit their exposure to the risk of loss as well as enhance their capital position. To qualifyff
for
reinsurance accounting in accordance with applicable guidance, the assuming company (reinsurer) must have the
“reasonable possibility” that it may realize a “significant loss.” In instances where the ceding company does not
transfer significant insurance risk to the reinsurer, deposit accounting is utilized. Deposits received are reported in
Other Assets on the Consolidated Balance Sheetstt
of
Operations. As amounts are paid or received in accordance with the agreements, the deposit balance will be
adjusted. Any risk charges payable related to reinsurance agreements where deposit accounting is applicable are
recorded as an Other Liability.
rather than income in the Consolidated Statett mentstt
Unearned and Advanced Premium: Premium collected from both life and health policies that have not been earned
and recognized in accordance with applicable GAAPAA . Refer to Recognitiontt
Revenue below.
of Premium
rr
69
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
tt
y
Benefitsff
y
Payable
laims and Other
Policll y Cc
: Globe Life establishes a liability for known policy benefits payable and
an estimate of claims that have been incurred but not yet reported to the Company. Globe Life makes an estimate of
unreported claims after careful evaluation of all informat
ion available to the Company. This estimate is based on
prior experience and is reviewed quarterly. However, there is no certainty the stated liability for claims and other
benefits, including the estimate of unsubmitted claims, will be Globe Life's ultimate obligation. For more informat
ion,
77
see Note 7—Liabili
ty for Unpaid Claims.
ff
ff
ff
Current and Deferred
Income Taxes: Current and deferred income taxes are accounted for under the asset and
liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
nces between the consolidated financial statement book values and tax bases of assets and liabilities.
ff
differe
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differe
on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
nces are expected to be recovered or settled. The effect
ff
ff
Benefitsff
: Globe Life accounts forff
its postretirement defined benefit plans by recognizing the funded
tt
Postretirement
status of those plans on its Consolidated Balance Sheets in accordance with accounting guidance. Periodic gains
and losses attributable to changes in plan assets and liabilities that are not recognized as components of net
periodic benefit costs are recognized as components of other comprehensive income, net of tax. The supplemental
executive retirement plan is accounted for consistent with the qualified noncontributory pension plan. The net assets
are included in a Rabbi Trust and recorded in Other Assets on the Consolidated Balance Sheets.tt More informat
ion
concerning the accounting and disclosures for postretirement benefits is found in Note 9—Postretirement
Benefits.
ff
ff
tt
: Globe Life accounts forff
y
Treasury Stock
is accounted for using the weighted-average cost method. More informat
Equity.t
purchases of treasury stock on the cost method. Issuance of treasury stock
ion is found in Note 12—Shareholders'
ff
p
: Premium income for traditional
of Premium Revenue and Related Expenses
long-duration life and
g
Recognitiontt
health insurance products is recognized evenly over the contract period and when due from the policyholder.
Premiums for short-duration health contracts are recognized as revenue over the contract period in proportion to the
insurance protection provided. Premiums for universal
life-type and annuity contracts are added to the policy
account value, and revenues for such products are recognized as charges to the policy account value for mortality,
administration, and surrenders (retrospective deposit method). Life premium includes policy charges of $14.2
million, $14.7 million, and $15.6 million for the years ended December 31, 2021, 2020, and 2019, respectively.
Other premium consists of annuity policy charges in each year. For most insurance products, the related benefits
and expenses are matched with revenues by means of the provision of future policy benefits and the amortization of
DAC in a manner which recognizes profits as they are earned over the revenue recognition period. For limited-
payment life i
f nsurance products, the profits are recognized over the contract period.
p
Stock-kk Based Compensationtt
stock-based compensation by recognizing an expense in the
consolidated financial statements based on the “fair value method.” The fair value method requires that a fair value
be assigned to a stock option or other stock grant on its grant date and that this value be amortized over the
grantees’ service period.
: Globe Life accounts forff
The fair value method requires the use of an option valuation model to value employee stock options. Globe Life
has elected to use the Black-Scholes valuation model for option expensing. A summary of assumptions for options
granted in each of the three years 2019 through 2021 is as follows:
Volatility factor ..........................................................................................................................
21.8 %
15.7 %
15.7 %
Dividend yield ...........................................................................................................................
Expected term (in years).........................................................................................................
Risk-free rate ............................................................................................................................
0.8 %
5.11
0.6 %
0.7 %
5.12
1.2 %
0.8 %
5.10
2.5 %
2021
2020
2019
70
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
tt
The expected term is generally derived from Company experience. However, expected terms are determined based
on the simplified method as permitted under the ASC 718, Stock Compensation,
topic when Company experience is
. On April 26, 2018, the shareholders approved the Globe Life Inc. 2018 Incentive Plan, formerly the
ff
insufficient
Torchmark Corporation 2018 Incentive Plan (the "2018 Incentive Plan"). The 2018 Incentive Plan replaced all
previous plans. The 2018 Incentive Plan allows for option grants forf
employees with a seven-year contractual term
which vest over three years in addition to ten-year grants which vest over five years as permitted by the previous
plans. Director grants vest over six months. The Company has suffiff cient experience with seven-year grants that
vest in three years, but insufficient
the Company has used
the simplified method to determine the expected term for the ten-year grants with five-year vesting and will do so
until adequate experience is developed. Volatility and risk-free interest rates are assumed over a period of time
consistent with the expected term of the option. Volatility is measured on a historical basis. Monthly data points are
utilized to derive volatility forff
periods greater than three years. Expected dividend yield is based on current dividend
yield held constant over the expected term. Once the fair value of an option has been determined, it is amortized on
a straight-line basis over the employee’s service period for that grant (from the grant date to the date the grant is
fully vested). Expenses for restricted stock and restricted stock units are based on the grant date fair value allocated
on a straight-line basis over the service period. Performance share expense is recognized based on management’s
estimate of the probability of meeting the metrics identified in the performance share award agreement, assigned to
each service period as these estimates develop.
historical experience with five-year vesting. Therefore,
ff
ff
f
Stock-based compensation expense is included in “Other operating expense” in the Consolidated Statements ott
Operations. Globe Life management views all stock-based compensation expense as a Corporate and Other
expense and, therefore,
ion concerning the Company's
segments is provided in Note 14—Business Segmentstt .
presents it as such in its segment analysis. More informat
ff
ff
g p
Earnings per Share
: Globe Life presents basic and diluted earnings per common share (EPS) on the face of the
Consolidated Statements of Operations for income from continuing operations and income from discontinued
operations. Basic EPS is computed by dividing income available to common shareholders by the weighted average
common shares outstanding for the period. Diluted EPS is calculated by adding to shares outstanding the additional
net effect
of potentially dilutive securities or contracts, such as stock options, which could be exercised or converted
ff
into common shares. For more informff
ation on earnings per share, see Note 12—Shareholders' Equity.t
Accounting Pronouncements Adopted in the Current Year
Standard
Description
ASU No. 2020-08,
Codification
Improvements to
Subtopic 310-20,
Receivables-
Nonrefundable Fees
and Other Costs
The standard was issued as an
amendment to ASU 2017-08, and
clarifies that callable debt securities
with a premium should be
amortized to the next call date.
Effective Date
This standard
became effective
ff
on January 1, 2021.
Effect on the Consolidated Financial
Statements
The adoption of this standard did not have a
material impact on the consolidated financial
statements.
71
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Accounting Pronouncements Yet to be Adopted
Standard
Description
Effective Date
As a result of the
issuance of ASU
2020-11 in
November 2020,
date
ff
the effective
for this standard
was changed to
January 1, 2023.
Early adoption is
available.
ASU No.
2018-12/2019-09/20
20-11,
Financial Services -
Insurance (Topic
944): Targeted
Improvements to the
Accounting
for Long-
Duration Contracts,
with clarification
guidance issued in
November 2019 and
2020.
ASU 2018-12 is a significant
change to our current accounting
and disclosure of long-duration
contracts, which is our primary
business. The guidance was
primarily issued to: 1) improve the
timeliness of recognizing changes
in the liability for future policy
benefits and modify the rate used
to discount future cash flows, 2)
simplify and improve the
accounting for certain market-
based options or guarantees
associated with deposit (or account
balance) contracts, 3) simplify the
amortization of deferred acquisition
costs, and 4) improve the
effectiveness
disclosures.
of the required
ff
On an annual basis, the Company
will be required to update cash flow
assumptions such as mortality,
morbidity, and persistency, which
are recorded in net income. On a
quarterly basis, the future policy
benefits will be remeasured utilizing
an upper-medium grade fixed
income instrument yield and the
effects
recognized in accumulated other
comprehensive income (AOCI).
of the change will be
ff
Effect on the Consolidated Financial
Statements
The Company does not expect
to early
adopt ASU 2018-12 and has selected a
modified retrospective transition method
upon adoption as of the transition date of
January 1, 2021.
due
Due to the overall nature of this standard,
the impact on the consolidated financial
statements is expected to be significant. At
the transition date, the Company expects a
significant decrease in accumulated other
comprehensive
the
income
requirement to re-measure policy liabilities
using an interest rate currently lower than
what is used in valuing the policy liabilities
the
under existing guidance.
new guidance requires the removal of
interest on our DAC asset and changes the
the asset. These
related amortization of
changes are expected to result
in a
significant reduction to DAC amortization in
the near to intermediate term.
In addition,
to
tP he new guidance will not
While the requirements of the new guidance
represent a significant change from existing
GAAP,
impact
capital and surplus or net
income under
statutory accounting practices, cash flows
on our policies, or the underlying economics
of our business.
proper
controls,
Significant progress has been made by the
Company in order to timely adopt the new
guidance, including validating computations,
establishing
finalizing
accounting policies, and preparing financial
anticipates
disclosures. The Company
providing quantitative estimates of
the
impact of adoption of the ASU later this year
once we have properly tested our models
and assumptions and determined the
appropriate discount rates.
72
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 2—Statutory Accounting
Life insurance subsidiaries of Globe Life are required to file statutory financial statements with state insurance
regulatory authorities. Accounting principles used to prepare these statutory financial statements differ
from GAAPAA .
Consolidated net income and shareholders’ equity (capital and surplus) on a statutory basis for the insurance
subsidiaries were as follows:
ff
Life insurance subsidiaries .......................... $
373,703
$
441,589
$
462,515
$
1,523,247
$
1,408,281
Net Income
Year Ended December 31,
Shareholders’ Equity
At December 31,
2021
2020
2019
2021
2020
The excess, if any, of shareholders' equity of the insurance subsidiaries on a GAAP basis over that determined on a
statutory basis is not available for distribution by the insurance subsidiaries to the Parent Company without
regulatory approval.
egulatory
ion on the restrictions on the
requirements in the aggregate was $563 million at December 31, 2021. More informat
payment of dividends can be found in Note 12—Shareholders' Equity.t
Insurance subsidiaries’ statutory capital and surplus necessary to satisfy r
ff
ff
The Company's statutory financial statements are presented on the basis of accounting practices prescribed by the
insurance department of the state of domicile of each insurance subsidiary. While all states have adopted the
National Association of Insurance Commissioners’ (NAIC) statutory accounting practices (NAIC SAP) as the basis
for statutory accounting, certain states have retained prescribed practices of their respective insurance code or
administrative code which can differ
from NAIC SAP. For Globe Life's life insurance companies, there are no
significant differences between NAIC SAP and the accounting practices prescribed by the states of domicile.
ff
73
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 3—Supplemental Information about Changes to Accumulated Other Comprehensive Income
p
Components of Accumulated Other
Accumulated Other Comprehensive Income is as folff
Comprehensive Income
p
tt
lows for each of the years 2019 through 2021:
: An analysis of the change in balance by component of
Available
for Sale
Assets
Deferred
Acquisition
Costs
Foreign
Exchange
Pension
Adjustments
Total
For the year ended December 31, 2019:
Balance at January 1, 2019 .................................. $
435,698
$
(4,163) $
6,495
$
(118,555) $
319,475
Other comprehensive income (loss) before
reclassifications, net of tax....................................
1,557,883
(1,753)
Reclassifications, net of tax ..................................
(10,931)
Other comprehensive income (loss)....................
Balance at December 31, 2019 .........................
1,546,952
1,982,650
For the year ended December 31, 2020:
Other comprehensive income (loss) before
reclassifications, net of tax....................................
Reclassifications, net of tax ..................................
Other comprehensive income (loss)....................
Balance at December 31, 2020 .........................
1,167,003
25,919
1,192,922
3,175,572
—
(1,753)
(5,916)
1,212
—
1,212
(4,704)
5,563
—
5,563
12,058
(32,102)
1,529,591
6,695
(4,236)
(25,407)
1,525,355
(143,962)
1,844,830
11,244
(34,103)
1,145,356
—
11,244
23,302
13,139
39,058
(20,964)
1,184,414
(164,926)
3,029,244
For the year ended December 31, 2021:
Other comprehensive income (loss) before
reclassifications, net of tax....................................
Reclassifications, net of tax ..................................
(385,231)
(25,051)
Other comprehensive income (loss)....................
(410,282)
Balance at December 31, 2021 ......................... $ 2,765,290
1,286
—
1,286
(3,915)
—
(3,915)
44,819
16,431
61,250
(343,041)
(8,620)
(351,661)
$
((
(3,418) $
(
))
)
19,387
$
((
(103,676) $ 2,677,583
(
))
)
74
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Reclassificat
presented below for the three years ended December 31, 2021.
stt
adjustment
tt
iontt
ff
j
: Reclassification adjustments out of Accumulated Other Comprehensive Income are
Component Line Item
Unrealized investment (gains) losses on
available for sale assets:
Year Ended December 31,
2020
2021
2019
Affected line items in the
Statement of Operations
Realized (gains) losses.............................................. $ (37,874) $ 26,345
$ (19,352) Realized (gains) losses
Amortization of (discount) premium .........................
6,164
6,464
5,515 Net investment income
Total before tax..........................................................
(31,710)
32,809
(13,837)
Tax...............................................................................
6,659
(6,890)
2,906
Income tax benefit (expense)
Total after-tax..........................................................
(25,051)
25,919
(10,931)
Pension adjustments:
Amortization of prior service cost .............................
Amortization of actuarial (gain) loss.........................
Total before tax..........................................................
631
20,166
20,797
632
16,000
16,632
631 Other operating expense
7,843 Other operating expense
8,474
Tax...............................................................................
(4,366)
(3,493)
(1,779)
Income tax benefit (expense)
Total after-tax..........................................................
16,431
13,139
6,695
Total reclassification (after-tax) .............................. $
(
(8,620) $ 39,058
(
)
)
)
$ (4,236)
)
(
(
75
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 4—Investments
p
: Summaries of fixed maturities available forff
sale by amortized cost, fair value, and allowance
Portfolill o Compositiontt
for credit losses at December 31, 2021 and 2020, and the corresponding amounts of gross unrealized gains and
losses recognized in accumulated other comprehensive income (loss) are as follows. Redeemable preferred stock
is included within "Corporates, by sector."
At December 31, 2021
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value(1)
% of Total
Fixed
Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed,
and government-sponsored
enterprises ............................................. $
States, municipalities, and political
subdivisions ...........................................
Foreign governments ...........................
Corporates, by sector:
Financial............................................
Utilities ...............................................
Energy ...............................................
Other corporate sectors..................
383,083
$
— $
64,513
$
(164) $
447,432
2,252,997
59,861
4,569,160
1,931,391
1,587,892
6,879,459
—
—
239,135
900
(2,907)
(5,132)
2,489,225
55,629
(387)
—
—
—
907,741
490,119
346,780
(9,349)
(1,012)
(1,683)
5,467,165
2,420,498
1,932,989
1,454,464
(13,362)
8,320,561
Total corporates ............................
14,967,902
(387)
3,199,104
(25,406)
18,141,213
Collateralized debt obligations............
Other asset-backed securities............
36,468
104,998
—
—
27,037
3,715
—
(430)
63,505
108,283
2
12
—
26
11
9
39
85
—
1
Total fixed maturities ................... $17,805,309 $
((
(387) $ 3,534,404
(
))
)
$
((
(34,039) $ 21,305,287
(
))
)
100
(1) Amount reported in the balance sheet.
(2) At fair value.
76
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
At December 31, 2020
Amortized
Cost
Allowance
for Credit
Losses
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value(1)
% of Total
Fixed
Maturities(2)
Fixed maturities available for sale:
U.S. Government direct, guaranteed,
and government-sponsored
enterprises .............................................. $
States, municipalities, and political
subdivisions ............................................
Foreign governments ............................
Corporates, by sector:
Financial.............................................
Utilities ................................................
Energy ................................................
Other corporate sectors...................
380,602
$
— $
87,272
$
(43) $
467,831
1,880,607
52,913
4,404,203
1,975,460
1,623,970
6,687,644
—
—
251,291
2,635
(315)
(898)
2,131,583
54,650
— 1,016,813
(24,221)
5,396,795
—
(3,346)
608,595
346,197
— 1,727,366
(108)
2,583,947
(3,083)
(6,218)
1,963,738
8,408,792
Total corporates .............................
14,691,277
(3,346)
3,698,971
(33,630)
18,353,272
Collateralized debt obligations.............
Other asset-backed securities.............
57,007
134,739
—
—
23,460
3,614
(8,869)
(3,778)
71,598
134,575
2
10
—
26
12
9
40
87
—
1
Total fixed maturities .................... $17,197,145 $
(
(3,346) $ 4,067,243
(
)
)
$
(
(47,533) $21,213,509
(
)
)
100
(1) Amount reported in the balance sheet.
(2) At fair value.
A schedule of fixed maturities available forff
sale by contractual maturity date at December 31, 2021, is shown below
on an amortized cost basis, net of allowance for credit losses, and on a fair value basis. Actual disposition dates
could differ
from contractual maturities due to call or prepayment provisions.
ff
At December 31, 2021
Amortized
Cost, net
Fair
Value
Fixed maturities available for sale:
Due in one year or less ......................................................................................................................... $
Due after one year through five years.................................................................................................
Due after five years through ten years................................................................................................
Due after ten years through twenty years ..........................................................................................
Due after twenty years...........................................................................................................................
Mortgage-backed and asset-backed securities.................................................................................
98,115
$
99,760
900,326
1,757,273
6,862,449
8,045,149
141,610
995,569
2,083,816
8,653,145
9,301,053
171,944
$ 17,804,922
$ 21,305,287
77
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Analysisyy
y
of investment
summarized as follows:
tt
tt
operations:
p
"Net investment income" for the three years ended December 31, 2021, is
Year Ended December 31,
2021
2020
2019
Fixed maturities available for sale............................................................................ $
892,421
$
873,352
$
864,280
Policy loans..................................................................................................................
Other long-term investments(1) .................................................................................
Short-term investments..............................................................................................
Less investment expense..........................................................................................
45,318
35,838
24
973,601
(21,154)
44,801
26,196
545
944,894
(17,832)
43,434
16,198
2,592
926,504
(16,045)
Net investment income ....................................................................................... $
952,447
$
927,062
$
910,459
(1) For the years ended 2021, 2020 and 2019, the investment funds, accounted for under the fair value option method, recorded $26.7 million,
$15.3 million and $5.6 million, respectively in net investment income.
An analysis of "realized gains (losses)" is as follows:
Realized investment gains (losses):
Fixed maturities available for sale:
Sales and other(1)................................................................................................... $
Provision forff
credit losses ....................................................................................
Investment funds—fair value option .....................................................................
Other investments ...................................................................................................
Realized gains (losses) from investments ..................................................
Realized loss on redemption of debt(2) ...........................................................
Applicable tax...........................................................................................................
Year Ended December 31,
2021
2020
2019
34,916
$
(22,999) $
19,354
2,959
22,918
7,840
68,633
(9,314)
59,319
(12,457)
(3,346)
1,045
21,563
(3,737)
(634)
(4,371)
1,955
—
1,256
11
20,621
—
20,621
(4,330)
16,291
Realized gains (losses), net of tax ................................................................. $
46,862
$
(
(2,416) $
(
)
)
(1) For the years ended 2021, 2020 and 2019, the Company recorded $109.2 million, $219.8 million and $243.2 million of exchanges of fixed
maturities (noncash transactions) that resulted in $25.2 million, $7.9 million, and $20.5 million, respectively in realized gains (losses).
(2) Refer to Note 11—Debt for further discussion.
An analysis of the net change in unrealized investment gains (losses) is as follows:
Change in investment gains (losses) on:
Fixed maturities available for sale......................................................................... $
(519,345) $
1,528,339
$
1,946,910
Year Ended December 31,
2021
2020
2019
78
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Selected inforff mation about sales of fixed maturities available forff
sale is as follows:
Fixed maturities available for sale:
Proceeds from sales(1) ............................................................................................ $
116,656
$
52,681
$
Gross realized gains ...............................................................................................
Gross realized losses..............................................................................................
1,848
(12,101)
2,642
(39,153)
79,108
1,227
(3,674)
(1) There were no unsettled sales in the periods ended December 31, 2021, 2020 and 2019.
Year Ended December 31,
2021
2020
2019
Fair value measurements: The following tables represent the fair value of fixed maturities measured on a recurring
basis at December 31, 2021 and 2020:
Fair Value Measurement at December 31, 2021:
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total Fair
Value
Fixed maturities available for sale
U.S. Government direct, guaranteed, and
government-sponsored enterprises ..................... $
States, municipalities, and political subdivisions
Foreign governments .............................................
Corporates, by sector:
Financial .................................................................
Utilities ....................................................................
Energy ....................................................................
Other corporate sectors .......................................
Total corporates .................................................
Collateralized debt obligations .............................
Other asset-backed securities ..............................
Total fixed maturities ......................................... $
—
—
—
—
—
—
—
—
—
—
—
$
447,432
$
2,489,225
55,629
5,303,547
2,266,231
1,919,416
8,010,331
17,499,525
—
108,283
—
—
—
$
447,432
2,489,225
55,629
163,618
154,267
13,573
310,230
641,688
63,505
—
5,467,165
2,420,498
1,932,989
8,320,561
18,141,213
63,505
108,283
$
20,600,094
$
705,193
$ 21,305,287
Percentage of total ..................................................
— %
97 %
3 %
100 %
79
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fair Value Measurement at December 31, 2020:
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total Fair
Value
Fixed maturities available for sale
U.S. Government direct, guaranteed, and
government-sponsored enterprises ....................... $
States, municipalities, and political subdivisions .
Foreign governments ...............................................
Corporates, by sector:
Financial ...................................................................
Utilities ......................................................................
Energy ......................................................................
Other corporate sectors .........................................
Total corporates ...................................................
Collateralized debt obligations ...............................
Other asset-backed securities ................................
Total fixed maturities ........................................... $
—
—
—
—
—
—
—
—
—
—
—
$
467,831
$
2,131,583
54,650
5,222,066
2,400,602
1,925,549
8,090,550
17,638,767
—
121,705
—
—
—
$
467,831
2,131,583
54,650
174,729
183,345
38,189
318,242
714,505
71,598
12,870
5,396,795
2,583,947
1,963,738
8,408,792
18,353,272
71,598
134,575
$
20,414,536
$
798,973
$ 21,213,509
Percentage of total .......................................................
— %
96 %
4 %
100 %
80
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
lowing tables represent changes in fixed maturities measured at fair value on a recurring basis using
The folff
significant unobservable inputs (Level 3):
Analysis of Changes in Fair Value Measurements Using
Significant Unobservable Inputs (Level 3)
Asset-
backed
Securities
Collateralized
Debt
Obligations
Corporates
Total
Balance at January 1, 2019 ............................................ $
12,982
$
73,369
$
553,471
$
639,822
Included in realized gains/losses ...................................
Included in other comprehensive income .....................
Acquisitions(1) ....................................................................
Sales...................................................................................
Amortization.......................................................................
Other(2)................................................................................
Transfers into Level 3(3) ...................................................
Transfers out of Level 3(3)................................................
Balance at December 31, 2019 .....................................
Included in realized gains/losses ...................................
Included in other comprehensive income .....................
Acquisitions(1) ....................................................................
Sales...................................................................................
Amortization.......................................................................
Other(2)................................................................................
Transfers into Level 3(3) ...................................................
Transfers out of Level 3(3)................................................
Balance at December 31, 2020 .....................................
Included in realized gains/losses ...................................
Included in other comprehensive income .....................
Acquisitions(1) ....................................................................
Sales...................................................................................
Amortization.......................................................................
Other(2)................................................................................
Transfers into Level 3(3) ...................................................
Transfers out of Level 3(3)................................................
Balance at December 31, 2021 ..................................... $
—
708
—
—
—
(513)
—
—
—
1,514
—
—
4,596
(5,375)
—
—
13,177
74,104
(173)
(2,523)
—
—
—
(134)
—
—
12,870
(82)
63
—
(12,851)
—
—
—
—
—
—
4,551
(4,534)
—
—
71,598
(6,787)
12,447
—
(13,213)
4,505
(5,045)
—
—
396
30,378
—
—
13
(19,154)
107,024
—
672,128
1,579
17,082
67,820
—
12
396
32,600
—
—
4,609
(25,042)
107,024
—
759,409
1,579
14,386
67,820
—
4,563
(44,116)
(48,784)
—
—
714,505
3,275
(20,818)
25,000
—
9
(80,283)
—
—
—
—
798,973
(3,594)
(8,308)
25,000
(26,064)
4,514
(85,328)
—
—
— $
63,505
$
641,688
$
705,193
Change in unrealized gains or losses for the period included in other comprehensive income for assets held at the end of the
reporting period:
Asset-
backed
Securities
Collateralized
Debt
Obligations
Corporates
Total
2019 ................................................................................ $
708
$
1,514
$
30,378
$
2020 ................................................................................
2021 ................................................................................
73)
63
(2,523)
12,447
17,082
(20,818)
32,600
14,386
(8,308)
(1) Acquisitions of Level 3 investments in each of the years 2019 through 2021 are comprised of private placement fixed maturities and equities.
(2) Includes capitalized interest, foreign exchange adjustments, and principal repayments.
(3) Considered to be transferred at the end of the period.
81
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Transfers between levels within the hierarchy occur when there are changes in the observability of the inputs and
market data. Transfers into Level 3 occur when there is little unobservable market activity forf
the asset/liability as of
the measurement date and the Company is required to rely upon internally-developed assumptions or third-parties.
Transfers out of Level 3 occur when quoted prices in active markets becomes available forff
identical assets/
liabilities or the ability to corroborate by observable market data.
The following table represents quantitative information about Level 3 fair
f
value measurements:
Quantitative Information about Level 3 Fair Value Measurements
As of December 31, 2021
Private placement fixed maturities............... $
539,880
Fair Value
Other corporate bonds...................................
101,808
Collateralized debt obligations .....................
63,505
$
705,193
Valuation
Techniques
Determination
of credit spread
Discounted
Cash Flows
Present Value
Techniques
Discounted
Cash Flows
Significant
Unobservable
Input
Range
Weighted-
Average(1)
Credit rating
A+ to B-
BBB
Discount rate
1.36% - 8.85%
3.05%
Market Quotes
100.25%
100.25%
Discount rate
6.45%
6.45%
(1) Unobservable inputs were weighted by the relative fair value of the instruments.
The private placement fixed maturities reported as Level 3, are managed by third-party investment managers.
These securities are valued based on the contractual cash flows discounted by a yield determined as a treasury
benchmark adjusted for a credit spread. The credit spread is developed from observable indices for similar public
fixed maturities and unobservable indices for private fixed maturities for corresponding credit ratings. However, the
credit ratings for the securities are considered unobservable inputs, as they are assigned by the third-party
investment manager based on a quantitative and qualitative assessment of the credit underwritten. A higher (lower)
credit rating would result in a higher (lower) valuation.
The collateral underlying collateralized debt obligations consists primarily of trust preferred securities issued by
banks and insurance companies. Collateralized debt obligations are valued at the present value of expected future
cash flows using an unobservable discount rate. Expected cash flows are determined by scheduling the projected
repayment of the collateral assuming no future defaults, deferrals, or recoveries. The discount rate is risk-adjusted
to take these items into account. A significant increase (decrease) in the discount rate will produce a significant
decrease (increase) in fair value. Additionally, a significant increase (decrease) in the cash flow expectations would
ion regarding valuation procedures, please
result in a significant increase (decrease) in fair value. For more informat
refer to Note 1—Significant
Investments in
Accountingtt
Securitiestt
Policies under the caption Fair Vii
aluVV e Measurements,tt
ff
.
ff
Other corporate bonds consist of obligations issued out of a special purpose vehicle (SPV). The market quotes
consisted of Level 3 quotes. An increase (decrease) in the market quotes will produce an increase (decrease) in fair
value.
82
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Unrealized Loss Analysisy
unrealized loss position.
: The following table discloses informat
ff
ion about fixed maturities available forff
sale in an
Number of issues (CUSIPs) held:
As of December 31, 2021.......................................................................................
As of December 31, 2020.......................................................................................
138
54
42
24
180
78
Less than
Twelve
Months
Twelve
Months or
Longer
Total
Globe Life's entire fixed maturity portfolio consisted of 2,060 issues by 843 differe
nt issuers at December 31, 2021
issuers at December 31, 2020. The weighted-average quality rating of all
and 1,900 issues by 777 different
unrealized loss positions at amortized cost was A- and BBB- as of December 31, 2021 and December 31, 2020,
respectively.
ff
ff
83
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
lowing tables disclose unrealized investment losses by class and major sector of fixed maturities available forff
The folff
sale at December 31, 2021 and December 31, 2020.
Analysis of Gross Unrealized Investment Losses
At December 31, 2021
Less than Twelve
Months
Twelve Months or
Longer
Total
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and
government-sponsored enterprises............. $
118
$
(1) $
3,867
$
(163) $
3,985
$
(164)
States, municipalities and political
subdivisions .....................................................
141,310
Foreign governments .....................................
12,567
(2,824)
(561)
Corporates, by sector:
Financial........................................................
133,654
(1,507)
Utilities ...........................................................
Energy ...........................................................
25,447
6,519
Other corporate sectors..............................
115,444
Total corporates ........................................
281,064
Collateralized debt obligations......................
—
Other asset-backed securities......................
10,489
(692)
(238)
(3,566)
(6,003)
—
(16)
2,436
23,144
52,864
2,372
—
40,249
95,485
—
1
(83)
143,746
(4,571)
35,711
(2,907)
(5,132)
(1,932)
186,518
(320)
—
(3,670)
(5,922)
—
—
27,819
6,519
155,693
376,549
—
10,490
(3,439)
(1,012)
(238)
(7,236)
(11,925)
—
(16)
Total investment grade securities...................
445,548
(9,405)
124,933
(10,739)
570,481
(20,144)
Below investment grade securities:
States, municipalities and political
subdivisions .....................................................
Corporates, by sector:
—
—
—
—
—
—
Financial........................................................
15,695
(272)
56,897
(5,638)
72,592
(5,910)
Utilities ...........................................................
Energy ...........................................................
Other corporate sectors..............................
—
—
700
Total corporates ........................................
16,395
Collateralized debt obligations......................
Other asset-backed securities......................
—
—
—
—
(11)
(283)
—
—
—
26,639
26,581
—
(1,445)
(6,115)
—
26,639
27,281
—
(1,445)
(6,126)
110,117
(13,198)
126,512
(13,481)
—
13,043
—
—
(414)
13,043
—
(414)
Total below investment grade securities .......
16,395
(283)
123,160
(13,612)
139,555
(13,895)
Total fixed maturities ....................................... $ 461,943
$
(
(9,688) $ 248,093
(
)
)
)
$ (24,351) $ 710,036
)
(
(
)
$ (34,039)
)
(
(
Gross unrealized losses may fluctuate quarter over quarter due to adverse factors in the market that affect our
holdings, such as changes in interest rates or credit spreads. The Company considers many factors when
determining whether an allowance for a credit loss should be recorded. While the Company holds securities that
may be in an unrealized loss position from time to time, Globe Life does not intend to sell and it is likely that
management will not be required to sell the fixed maturities prior to their anticipated recovery or maturity due to the
strong cash flows generated by its insurance operations.
84
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Analysis of Gross Unrealized Investment Losses
At December 31, 2020
Less than Twelve
Months
Twelve Months or
Longer
Total
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fair
Value
Unrealized
Loss
Fixed maturities available for sale:
Investment grade securities:
U.S. Government direct, guaranteed, and
government-sponsored enterprises............. $
States, municipalities and political
subdivisions .....................................................
Foreign governments .....................................
Corporates, by sector:
32,910
19,532
(315)
(898)
Financial........................................................
117,762
(2,564)
Utilities...........................................................
Energy ...........................................................
2,726
1,692
Other corporate sectors..............................
21,882
(108)
(8)
(720)
2,006
$
(43) $
— $
— $
2,006
$
(43)
—
—
6,333
—
14,871
—
—
—
32,910
19,532
(315)
(898)
(2,168)
124,095
(4,732)
—
(106)
—
2,726
16,563
21,882
(108)
(114)
(720)
Total corporates ........................................
144,062
(3,400)
21,204
(2,274)
165,266
(5,674)
Collateralized debt obligations......................
—
Other asset-backed securities......................
28,864
Total investment grade securities...................
227,374
—
(1,051)
(5,707)
—
5
—
—
—
28,869
21,209
(2,274)
248,583
—
(1,051)
(7,981)
Below investment grade securities:
States, municipalities and political
subdivisions .....................................................
Corporates, by sector:
Financial........................................................
Utilities...........................................................
Energy ...........................................................
Other corporate sectors..............................
Total corporates ........................................
Collateralized debt obligations......................
Other asset-backed securities......................
—
6,822
—
18,432
25,711
50,965
—
—
—
(36)
—
(757)
(3,588)
(4,381)
—
—
—
—
—
—
115,093
(19,453)
121,915
(19,489)
—
38,720
19,516
—
(2,212)
(1,910)
—
57,152
45,227
—
(2,969)
(5,498)
173,329
(23,575)
224,294
(27,956)
11,131
11,223
(8,869)
(2,727)
11,131
11,223
(8,869)
(2,727)
Total below investment grade securities .......
50,965
(4,381)
195,683
(35,171)
246,648
(39,552)
Total fixed maturities ....................................... $ 278,339
)
$ (10,088) $ 216,892
)
(
(
)
$ (37,445) $ 495,231
)
(
(
)
$ (47,533)
)
(
(
Gross unrealized losses decreased from $47.5 million at December 31, 2020, to $34.0 million at December 31,
2021, a decrease of $13.5 million. The decrease in the gross unrealized losses from the prior year was primarily
attributable to the decrease in market interest rates.
85
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Fixed Maturitirr es, Allowance for Credit Losses
follows. Refer to Note 1 for factors considered in the recording of the allowance for credit losses.
: A summary of the activity in the allowance for credit losses is as
,
Year Ended December 31,
2021
2020
Allowance for credit losses beginning balance ........................................................................... $
3,346 $
Additions to allowance for which credit losses were not previously recorded................................
Additions (reductions) to allowance for fixed maturities that previously had an allowance .........
Reduction of allowance for which the Company intends to sell or more likely than not will be
required to sell or sold during the period..............................................................................................
387
—
(3,346)
Allowance for credit losses ending balance ................................................................................. $
387 $
—
36,065
—
(32,719)
3,346
As of December 31, 2021 and December 31, 2020, the Company did not have any fixed maturities in non-accrual
status.
tt
Concentrati
any given issuer. At December 31, 2021, the investment portfolio,
ff
ons of Credit Risk: Globe Life maintains a diversified investment portfolio with limited concentration in
:
at fair value, consisted of the following
ff
Investment grade fixed maturities:
Corporates .............................................................................................................................................................................................
77 %
States, municipalities, and political subdivisions .............................................................................................................................
11
U.S. Government direct, guaranteed, and government-sponsored enterprises.........................................................................
Other.......................................................................................................................................................................................................
2
1
Below investment grade fixed maturities:
Corporates .............................................................................................................................................................................................
3
States, municipalities, and political subdivisions ............................................................................................................................. —
U.S. Government direct, guaranteed, and government-sponsored enterprises......................................................................... —
Other....................................................................................................................................................................................................... —
Other
Policy loans, which are secured by the underlying insurance policy values...............................................................................
Other investments ................................................................................................................................................................................
94
2
4
100 %
As of December 31, 2021, state and municipal governments represented 11% of invested assets at fair value. Such
investments are made throughout the U.S. At December 31, 2021, the state and municipal bond portfolio at fair
value was invested in securities issued within the following states: Texas (22%), New York (10%), California
(10%),
Michigan (7%), Ohio (5%), and Florida (4%). Otherwise, there was no concentration within any given state greater
than 4%.
ff
86
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Corporate fixed maturities represent 80% of Globe Life's invested assets. These investments are spread across a
wide range of industries. Below are the ten largest industry concentrations held in the portfolio of corporate fixed
maturities at December 31, 2021, based on fair value:
Insurance..................................................................................................................................................................................................... 16 %
Electric utilities............................................................................................................................................................................................ 10
Banks ...........................................................................................................................................................................................................
Oil and natural gas pipelines....................................................................................................................................................................
Chemicals....................................................................................................................................................................................................
Transportation.............................................................................................................................................................................................
Real estate investment trusts...................................................................................................................................................................
Food .............................................................................................................................................................................................................
Oil and natural gas exploration and production ....................................................................................................................................
Telecommunications..................................................................................................................................................................................
7
6
5
4
4
4
4
3
At December 31, 2021, 3% of invested assets at fair value were represented by fixed maturities rated below
investment grade. Par value of these investments was $795 million, amortized cost was $702 million, and fair value
was $783 million. While these investments could be subject to additional credit risk, such risk should generally be
reflected in their fair value.
Securities, cash, and short-term investments held on deposit with various state and federal regulatory authorities
had an amortized cost and fair value, respectively, of $969 million and $1.1 billion at December 31, 2021 and $892
million and $1.1 billion at December 31, 2020.
tt
Other
g
Long-TermTT
Investments
: Other long-term investments consist of the folff
lowing assets:
Investment funds...................................................................................................................................... $
640,263
$
Commercial mortgage loan participations............................................................................................
Other ..........................................................................................................................................................
141,843
11,819
385,038
160,602
1,341
Total ....................................................................................................................................................... $
793,925
$
546,981
December 31,
2021
2020
The following table presents additional informat
and December 31, 2020 at fair value:
ff
ion about the Company's investment funds as of December 31, 2021
December 31,
Fair Value
Unfunded
Commitments
Investment Category
2021
2020
2021
Redemption Term/Notice
Commercial mortgage
loans........................................ $ 423,776 $ 227,050 $
237,631
Fully redeemable and non-redeemable with varying
terms.
Opportunistic credit...............
178,215
157,461
Initial 2 year lock on each new investment/semi-
annual withdrawals thereafter/full redemption within
36 month period.
—
Other .......................................
38,272
527
Total investment funds ... $ 640,263 $ 385,038 $
212,286
449,917
Fully redeemable with varying terms and non-
redeemable.
The Company committed to two new investment funds during the calendar year. The Company had $234 million of
capital called during the year from existing investment funds, reducing our unfunded commitments. Our unfunded
commitments were $450 million as of December 31, 2021.
87
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Commercial mortgage loan participat
g g
tt
ions
at December 31, 2021 and 2020 are as follows:
p
p
tt
(
(commercial mortgage
g g
t
loans):
) Summaries of commercial mortgage loans
2021
2020
Carrying
Value
% of Total
Carrying
Value
% of Total
Property type:
Mixed use................................................................................... $
Hospitality...................................................................................
Retail ...........................................................................................
Industrial.....................................................................................
Multi-family .................................................................................
Officeff
...........................................................................................
57,996
23,186
19,811
17,900
14,872
8,905
Total recorded investment .....................................................
142,670
Less allowance for credit losses.............................................
(827)
$
41
16
14
13
11
6
101
(1)
49,002
22,605
19,319
17,900
19,128
36,153
164,107
(3,505)
Carrying value, net of valuation allowance .................. $
141,843
100
$
160,602
31
14
12
11
12
22
102
(2)
100
2021
2020
Carrying
Value
% of Total
Carrying
Value
% of Total
Geographic location:
California .................................................................................... $
New York ....................................................................................
Pennsylvania .............................................................................
Indiana ........................................................................................
Florida .........................................................................................
Texas...........................................................................................
Other(1) ........................................................................................
Total recorded investment .....................................................
Less allowance for credit losses.............................................
67,659
18,373
11,673
,717
8,213
5,898
21,137
142,670
(827)
$
48
13
8
7
6
4
15
101
(1)
61,610
16,602
11,314
9,717
12,420
4,215
48,229
164,107
(3,505)
Carrying value, net of valuation allowance .................. $
141,843
100
$
160,602
38
10
7
6
8
3
30
102
(2)
100
(1) Included in 2020, was one loan in Virginia with a carrying value of $27 million and reportedr
during 2021, resulting in a zero balance for loans in Virginia as of December 31, 2021.
in Other in the table above. The loan was paid offff
88
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
lowing table is reflective of Management's internal risk ratings of the loan portfolio. Loans are rated low,
The folff
moderate, and high. The risk categories consider many different
factors such as quality of asset, borrower status, as
ff
well as macroeconomic factors including COVID-19. These loans, originated in 2017 to 2021, are transitional or
under construction and may not yet be income producing. Certain ratios such as loan to value and debt service
coverage ratios may not be evaluated as the value of the underlying transitional property significantly fluctuates
based on completion of the project.
Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
As of December 31, 2021
Number of
Loans
2021
2020
2019
2018
2017
Total
14 $
— $
23,636 $
11,925 $
41,209 $
35,729 $
112,499
6
2
—
—
1,400
—
17,173
4,593
—
7,005
—
—
18,573
11,598
22 $
— $
25,036 $
33,691 $
48,214 $
35,729
142,670
Risk Rating:
Low ............................
Medium ....................
High ...........................
Total commercial
mortgage loans .....
Less allowance for credit losses on the investment pool..................................................................................................
Less allowance for credit losses on individual loans .........................................................................................................
(827)
—
Carrying value, net of valuation allowance ................................................................................................................. $
141,843
Net Book Value of Commercial Mortgage Loans Receivable by Year of Origination
As of December 31, 2020
Risk Rating:
Number of
Loans
2020
2019
2018
2017
Total
Low .......................................................
17 $
20,176 $
14,757 $
33,132 $
61,460 $
129,525
Medium ...............................................
High ......................................................
4
3
—
—
10,640
4,554
7,796
11,592
—
—
18,436
16,146
Total commercial mortgage loans .
24 $
20,176 $
29,951 $
52,520 $
61,460
164,107
Less allowance for credit losses on the investment pool..................................................................................................
Less allowance for credit losses on individual loans .........................................................................................................
(2,503)
(1,002)
Carrying value, net of valuation allowance ................................................................................................................. $
160,602
As of December 31, 2021, the Company evaluated the commercial mortgage loan portfolio on a pool basis to
determine the allowance for credit losses. At the end of the period, the Company had 22 loans in the portfolio. For
the year ended December 31, 2021, the allowance for credit losses decreased by $2.7 million to $827 thousand.
The provision for credit
f
losses is included in "Realized gains (losses)" in the Consolidated Statements o
tt
Operations
tt
.
Year Ended December 31,
2021
2020
Allowance for credit losses beginning balance ........................................................................... $
3,505 $
Cumulative effect
ff
of adoption ASU 2016-13........................................................................................
Provision (reversal) for credit losses.....................................................................................................
—
(2,678)
Allowance for credit losses ending balance ................................................................................. $
827 $
—
335
3,170
3,505
There were no delinquent commercial mortgage loans as of December 31, 2021, compared with one delinquent
commercial mortgage at December 31, 2020. As of December 31, 2021, the Company had one commercial
mortgage loan in non-accrual status.
89
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 5—Deferred Acquisition Costs
An analysis of "DAC" is as follows:
ff
Balance at beginning of year .............................................................................. $
4,595,444
$
4,341,941
$
4,137,925
Year Ended December 31,
2021
2020
2019
Additions:
Deferred during period:
Commissions......................................................................................................
Other expenses .................................................................................................
Total deferred ..................................................................................................
Value of business acquired(1)..............................................................................
Foreign exchange adjustment............................................................................
Adjustment attributable to unrealized investment losses(2)............................
Total additions.................................................................................................
678,517
227,730
906,247
16,500
—
1,628
600,577
222,408
822,985
—
4,755
1,533
534,735
218,926
753,661
—
4,299
—
924,375
829,273
757,960
Deductions:
Amortized during period ........................................................................................
(603,838)
(575,770)
(551,726)
Foreign exchange adjustment..............................................................................
Adjustment attributable to unrealized investment gains(2) ...............................
Total deductions..............................................................................................
(1,253)
—
—
—
—
(2,218)
(605,091)
(575,770)
(553,944)
Balance at end of year .......................................................................................... $
4,914,728
$
4,595,444
$
4,341,941
(1) Refer to Note 1—Significant Accounting Policll
(2) Represents amounts pertaining to investments relating to universal life-type products.
ies for the discussion on the acquisition of Globe Life Benefits.
90
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 6—Commitments and Contingencies
iates of Globe Life reinsure a portion of insurance risk that is in excess of their retention
Reinsurance: Insurance affilff
limits. Current retention limits forff
new business written on ordinary life insurance range up to $500 thousand per life.
Life insurance ceded represented 0.3% of total life insurance in force at December 31, 2021 and 2020. Insurance
ceded on life and accident and health products represented 0.2% of premium income for 2021 and 2020. The
insurance affiliat
es of Globe Life would be liable for the reinsured risks ceded to other companies to the extent that
such reinsuring companies are unable to meet their obligations.
ff
ff
es also assume insurance risks of other external companies. Life reinsurance assumed
Insurance affiliat
represented 1.1% and 1.2% of
life insurance in force at December 31, 2021 and 2020, respectively, and
reinsurance assumed on life and accident and health products represented 0.8% and 0.5% of premium income for
2021 and 2020, respectively.
Leases: Globe Life primarily leases officeff
operating lease arrangements.
space, aviation equipment, and other equipment under a variety of
Rental expense for the three years ended December 31, 2021 is as follows:
Year Ended December 31,
2021
2020
2019
Rental expense ............................................................................................................................... $
4,674
$
4,674
$
3,831
Future minimum rental commitments required under operating leases having remaining noncancelable lease terms
in excess of one year at December 31, 2021 were as follows:
Operating lease commitments ......................... $
4,458
$
3,384
$
2,932
$
1,955
$
1,816
$
9,206
2022
2023
2024
2025
2026
Thereafter
Year Ended December 31,
Purchase Commitment
stt : Globe Life has various long-term noncancelable purchase commitments as well as
commitments to provide capital for low-income housing tax credit interests. See further discussion related to tax
credits in Note 1—Significant
Accountingtt
Policies.
ff
tt
Purchase commitments ..................................... $ 104,474
$
61,535
$ 23,504
$
13,170
$
9,611
$
221,689
2022
2023
2024
2025
2026
Thereafter
Year Ended December 31,
Investments: Globe Life is committed to invest under certain contracts related to investments in limited partnerships.
See Note—4 Investments for unfunded commitment table.
Guarantees: At December 31, 2021, Globe Life had in place three guarantee agreements, of which were either
Parent Company guarantees of subsidiary obligations to a third party, or Parent Company guarantees of obligations
between wholly-owned subsidiaries. As of December 31, 2021, Globe Life had no liability with respect to these
guarantees.
Letters of Credit: Globe Life has guaranteed letters of credit in connection with its credit facility with a group
of banks as disclosed in Note 11—Debt. The letters of credit were issued by TMK Re, Ltd., a wholly-owned
subsidiary, to secure TMK Re, Ltd.’s obligation for claims on certain policies reinsured by TMK Re, Ltd. that
were sold by other Globe Life insurance companies. These letters of credit facilitate TMK Re, Ltd.’s ability to
reinsure the business of Globe Life's insurance carriers. The gagreement was amended on September 30,
2021 and now expires in 2026. The maximum amount of letters of credit available is $250 million. The
91
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Parent Company would be liable to the extent that TMK Re, Ltd. does not pay the reinsured party. On
October 26, 2021, the letters of credit were amended to reduce the current amount outstanding to $125
million from $135 million outstanding.
Equipment leases: Globe Life has guaranteed performance
of certain of its subsidiaries as lessees under
two aviation leasing arrangements. At December 31, 2021, total remaining undiscounted payments under
the leases were approximately $3 million. The Parent Company would be responsible for any subsidiary
obligation in the event the subsidiary did not make payments or otherwise performff
under the terms of the
lease.
ff
y
p
: Globe Life subsidiaries are currently the subject of audits regarding the identification,
Unclaimed Propertyyt Auditstt
reporting and escheatment of unclaimed property arising from life insurance policies and a limited number of annuity
contracts. These audits are being conducted by private entities that have contracted with forty-seven states through
their respective Departments of Revenue, and have not resulted in any financial assessment from any state nor
indicated any liability. The audits are wide-ranging and seek large amounts of data regarding claims handling,
procedures, and payments of contract benefits arising from unreported death claims. No estimate of range can be
made at this time for loss contingencies related to possible administrative penalties or amounts that could be
payable to the states for the escheatment of abandoned property.
ionttg
: Globe Life Inc. (forff merly Torchmark Corporation) and its subsidiaries, in common with the insurance
tt
Litigat
industry in general, are subject to litigation, including putative class action litigation, alleged breaches of contract,
torts, including bad faith and fraud claims based on alleged wrongful or fraudulent acts of agents of the Parent
Company's insurance subsidiaries, employment discrimination, and miscellaneous other causes of action. Based
ion presently available, and in light of legal and other factual defenses available to the Parent
ff
upon informat
Company and its subsidiaries, management does not believe that it is reasonably possible that such litigation will
have a material adverse effect
on Globe Life's financial condition, future operating results or liquidity; however,
assessing the eventual outcome of litigation necessarily involves forward-looking speculation as to judgments to be
juries and appellate courts in the future. This bespeaks caution, particularly in states with
made by judges,
reputations for high punitive damage verdicts. Globe Life's management recognizes that large punitive damage
awards bearing little or no relation to actual damages continue to be awarded by juries in jurisdictions in which the
Company has substantial business, creating the potential for unpredictable material adverse judgments in any given
punitive damage suit.
ff
tt
On August 5, 2020, putative class and collective action litigation was filed against American Income Life Insurance
Company (“American Income”) and National Income Life Insurance Company (“National Income”) in United States
Bell, Gisele Mobley, Ashly Rai, and John Turner v.
District Court for the Central District of California (Nataliett
Insurance Company, Case No. 2:20-
Income Lifeff
Insurance Company and National
American Income Lifeff
cv-07046). On December 18, 2020, the plaintiffsff
voluntarily dismissed Mr. Turner’s claims and all claims against
defendant National Income. Following the dismissal, the complaint alleges that insurance agent trainees should
have been classified as employees, and after contracting should have been classified as employees instead of
agent.
independent contractors. Plaintiffff Bell is a former California
law on behalf of a putative California class for the four years prior to February
They assert claims under California
ff
13, 2020 through case conclusion. They make claims under (a) the California
Labor Code for alleged meal and rest
break violations, overtime, minimum wage, alleged failure to pay wages at the time of termination, expense
Business and
reimbursement, and alleged failure to provide accurate wage statements; and (b) the California
Professions Code for alleged unfair business practices. They also seek liquidated damages, penalties and
attorney’s fees under California
law. Plaintiffff Mobley is a former Florida agent who asserts a claim under Florida law
on behalf of a putative Florida class for the five years prior to February 13, 2020 through case conclusion. She
makes a claim under the Florida General Labor Regulations, including the Florida Minimum Wage Act, for alleged
failure to pay all wages owed. The plaintiffsff also assert a national collective action on behalf of all “similarly situated”
individuals for minimum wage, overtime, liquidated damages, penalties, an accounting and attorney’s fees and
costs under the Fair Labor Standards Act for the three years prior to February 13, 2020 through case conclusion.
American Income responded to the complaint with a motion to compel the named plaintiffsff
to arbitrate their
individual claims and other procedural challenges. On April 6, 2021, the court granted American Income’s motion to
trainee and plaintiffff Rai is a former California
ff
ff
ff
ff
ff
92
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
compel arbitration as to plaintiffsff Mobley and Rai, and denied the motion without prejudice as to plaintiffff Bell.
American Income subsequently renewed its motion to compel arbitration as to plaintiffff Bell. On November 30, 2021,
the court granted American Income’s motion to compel arbitration as to plaintiffff Bell.
Lifeff
On March 27, 2020, Combined Insurance Company of America (“Combined”) filed a lawsuit in the Circuit Court of
the 11th Judicial Circuit in and for Miami-Dade County, Florida against Family Heritage Life Insurance Company of
America (“Family Heritage”) and two former Combined employees who became appointed as insurance sales
agents with Family Heritage (Combined Insurance Company of America v. Reineldo Urgelles, Antonio Pineda, and
Insurance Company of America, Case No. 2020-007330-CA-01). On May 8, 2020, Combined
Family Heritagett
filed a lawsuit in the 67th District Court of Tarrant County, Texas against Family Heritage and two different
former
Combined employees who became appointed as insurance sales agents with Family Heritage (Combined Insurance
Company of America v. Stephen Hernandez, Francisco Azuero, and Familyii Heritagett
Insurance Company of
America, Case No. 067-316824-20). The lawsuits allege that the individual insurance sales agents, in violation of
their
restrictive covenants with Combined, conspired with Family Heritage to improperly solicit Combined
policyholders to purchase Family Heritage products, and recruit Combined employees to contract as Family
Heritage insurance sales agents. As to Family Heritage, the lawsuits allege claims for conspiracy and tortious
interference with business relations, and seek compensatory damages, as well as injunctive and equitable relief. On
July 8, 2020 and July 10, 2020, the Texas and Florida courts, respectively, granted Combined’s requests for a
temporary injunction. The Texas temporary injunction was subsequently vacated on appeal as to Family Heritage.
Combined’s non-equitable claims in both lawsuits were referred to confidential arbitration. On November 12, 2021,
Family Heritage filed a motion for summary judgment and Combined filed motions for partial summary judgment. On
December 31, 2021, the arbitrator denied Family Heritage’s motion for summary judgment, and on January 2, 2022,
the arbitrator granted Combined’s partial motions for summary judgment. Combined’s request for compensatory and
exemplary damages, as well as attorney’s fees, is under review by the arbitrator.
Lifeff
ff
93
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 7—Liability for Unpaid Claims
Activity in the liability for unpaid health claims is summarized as follows:
Year Ended December 31,
2021
2020
2019
Balance at beginning of period .......................................................................... $
162,261
$
163,808
$
154,528
Incurred related to:
Current year ..........................................................................................................
Prior years .............................................................................................................
Total incurred......................................................................................................
Paid related to:
Current year ..........................................................................................................
Prior years .............................................................................................................
Total paid ............................................................................................................
638,054
(22,477)
615,577
487,096
122,910
610,006
584,936
(14,829)
570,107
442,127
129,527
571,654
Balance at end of period ...................................................................................... $
167,832
$
162,261
$
612,305
(1,188)
611,117
470,426
131,411
601,837
163,808
At the end of each period, the liability for unpaid health claims includes an estimate of claims incurred but not yet
reported to the Company. Such estimates are updated regularly based upon the Company’s most recent claims
data with recognition of emerging experience trends. Due to the nature of the Company’s health business, the
payment lags are relatively short and most claims are fully paid within a year from the time incurred. Fluctuations in
claims experience can lead to either over or under estimation of the liability forff
any given year. The difference
between the estimate made at the end of the prior period and the actual experience during the period is reflected
above under the caption “Incurred related to: Prior years.”
ff
Below is the reconciliation of the liability of "Policy claims and other benefits payable" in the Consolidated Balance
Sheetstt .
Policy claims and other benefits payable:
Life insurance .................................................................................................................................... $
245,108
$
Health insurance ...............................................................................................................................
167,832
Total............................................................................................................................................... $
412,940
$
237,246
162,261
399,507
December 31,
2021
2020
94
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 8—Income Taxes
The following table discloses significant components of income taxes forff
each year presented:
Year Ended December 31,
2021
2020
2019
Income tax expense (benefit) from continuing operations:
Current income tax expense (benefit) ................................................................ $
144,718
$
129,647
$
134,948
Deferred income tax expense (benefit)..............................................................
22,713
167,431
35,264
164,911
Shareholders’ equity:
Other comprehensive income (loss)...................................................................
(93,480)
314,845
$
73,951
$
479,756
$
35,449
170,397
405,472
575,869
nces between net income beforeff
In each of the years 2019 through 2021, deferred income tax expense (benefit) was incurred because of certain
differe
f
income tax expense (benefit) as reported on the Consolidated Statements ott
ff
Operations and taxable income as reported on Globe Life's income tax returns. As explained in Note 1—Significant
Accountingtt
nces caused the consolidated financial statement book values of some assets and
liabilities to be differe
nt from their respective tax bases.
Policies, these differe
ff
ff
ff
ff
The effect
ive income tax rate differed from the expected U.S. federal statutory rate of 21% as shown below:
Expected federal income tax expense (benefit) .......... $ 191,602
21.0
$ 188,304
21.0
$ 195,569
21.0
Year Ended December 31,
2021
%
2020
%
2019
%
Increase (reduction) in income taxes resulting from:
Low income housing investments........................................
(12,115)
Share-based awards..............................................................
Tax-exempt investment income............................................
(5,597)
(6,977)
Other.........................................................................................
518
(1.3)
(0.6)
(0.8)
0.1
(11,913)
(5,013)
(5,830)
(637)
(1.3)
(0.6)
(0.6)
(0.1)
(11,605)
(11,780)
(3,192)
1,405
Income tax expense (benefit) ........................................... $ 167,431
18.4
$ 164,911
18.4
$ 170,397
(1.2)
(1.3)
(0.3)
0.1
18.3
95
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The tax effect
tax liabilities are presented below:
s of temporary differe
ff
ff
nces that gave rise to significant portions of the deferred tax assets and deferred
December 31,
2021
2020
Deferred tax assets:
Fixed maturity investments................................................................................................................. $
— $
Carryover of tax losses........................................................................................................................
Total gross deferred tax assets ....................................................................................................
Deferred tax liabilities:
Unrealized gains...................................................................................................................................
Employee and agent compensation..................................................................................................
Deferred acquisition costs...................................................................................................................
Future policy benefits, unearned and advance premiums, and policy claims ............................
Other liabilities ......................................................................................................................................
5,962
5,962
713,879
93,738
723,337
226,943
15,738
4,279
5,534
9,813
808,071
88,012
688,034
257,640
7,209
Total gross deferred tax liabilities.................................................................................................
1,773,635
1,848,966
Net deferred tax liability ....................................................................................................................... $
1,767,673
$
1,839,153
Income Tax Return: Globe Life Inc. and its subsidiaries file a life-nonlife consolidated federal income tax return. The
statutes of limitations for the Internal Revenue Service's examination and assessment of additional tax are closed
for all tax years prior to 2018 with respect to Globe Life's consolidated federal income tax returns. Management
any potential
concludes that adequate provision has been made in the consolidated financial statements forff
assessments that may result from current or future tax examinations and other tax-related matters for all open
years.
: Globe Life has a $28.4 million net operating loss (NOL) carryforward
at December 31, 2021, of which
tt
Valuations
$18.8 million was created prior to 2018 and will begin to expire in 2032 if not otherwise used to offset
future taxable
income. The remaining NOL carryforward of $9.6 million may be carried forward indefinitely. A valuation allowance is
to be recorded when it is more likely than not that deferred tax assets will not be realized by the Company. No
valuation allowance has been recorded relating to Globe Life's deferred tax assets as management has determined
taxable income in future periods to fully realize its existing
that Globe Life will more likely than not have sufficient
deferred tax assets.
ff
ff
ff
Globe Life's tax liability is adjusted to include a provision for uncertain tax positions taken or expected to be taken in
a tax return. However, during the years 2019 through 2021, Globe Life did not have any uncertain tax positions
which resulted in unrecognized tax benefits.
p
and interest:
Tax penaltiestt
Globe Life's continuing practice is to recognize penalties and interest related to income
tax matters in income tax expense. The Company recognized interest income of $0 thousand, $0 thousand, and
$55 thousand, net of federal income tax expense, in its Consolidated Statements ott
f OpeO rations for 2021, 2020, and
2019, respectively. The Company had no accrued interest or penalties at December 31, 2021 or 2020.
96
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 9—Postretirement Benefits
Globe Life has qualified noncontributory defined benefit pension plans (Pension Plans) and contributory savings
plans that cover substantially all employees. There is also a nonqualified noncontributory supplemental executive
retirement plan (SERP) that covers a limited number of officeff
rs. The tables included herein will focus on the Pension
Plans and SERP.
The total cost of these retirement plans charged to operations was as follows:
Year Ended December 31,
2021
2020
2019
Plan Type:
Defined Contribution Plans(1).................................................................................. $
Defined Benefit Pension Plans(2) ...........................................................................
5,188 $
4,855
$
41,778
33,826
4,817
24,134
(1) 401K plans.
(2) Qualified pension plans and SERP.
Globe Life accrues expense for the defined contribution plans based on a percentage of
the employees’
contributions. The plans are funded by the employee contributions and a Globe Life contribution equal to the
amount of accrued expense. Plan contributions are both mandatory and discretionary, depending on the terms of
the plan.
Pension Plans: Cost for the pension plans has been calculated on the projected unit credit actuarial cost method. All
the pension plans are as of December 31 of the respective year. The pension plans
plan measurements forff
covering the majority of employees are qualified and funded. Contributions are made to funded pension plans
subject to minimums required by regulation and maximums allowed for tax purposes.
The
Globe Life's SERP provides an additional supplemental defined pension benefit to a limited number of officers.
supplemental benefit is based on the participant’s qualified plan benefit without consideration to the regulatory limits
on compensation and benefit payments applicable to qualified plans, except that eligible compensation is capped at
$1 million. The SERP is nonqualified and unfunded. However, a Rabbi Trust has been established to support the
liability for this plan. The Rabbi Trust consists of life insurance policies on the lives of plan participants with an
ed insurance carrier as well as an investment account. Since this plan is nonqualified, the investments and
ff
unaffiliat
the policyholder value of the insurance policies in the Rabbi Trust are not included as defined benefit plan assets,
but rather assets of the Company. They are included in “Other Assets” in the Consolidated Balance Sheetstt .
ff
Defined benefit and SERP plan contributions were $17.9 million in 2021, $21.9 million in 2020, and $21.6 million in
2019. In 2022, the Company expects to make a similar contribution to the plans as in 2021.
97
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Pension Assets: Plan assets in the funded plans consist primarily of investments in marketable fixed maturities and
equity securities that are valued at fair value. Globe Life measures the fair value of its financial assets, including the
assets in its benefit plans, in accordance with accounting guidance which establishes a hierarchy for asset values
and provides a methodology for the measurement of value. Please refer to Note 1—Significant
Policies
under the caption Fair Vii
for a complete discussion of valuation
procedures. The following table presents the assets of the Company's pension plans at December 31, 2021 and
2020.
aluVV e Measurementstt , Investments in Securitiestt
Accountingtt
ff
Pension Assets by Component at December 31, 2021
Fair Value Determined by:
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Amount
% to
Total
Corporate bonds:
Financial .................................................. $
— $
52,522
$
— $
52,522
Utilities .....................................................
Energy......................................................
Other corporates ....................................
Total corporate bonds ..............................
Exchange traded fund(1)...........................
Other bonds...............................................
Guaranteed annuity contract(2) ...............
Short-term investments............................
Other...........................................................
—
—
—
—
315,720
—
—
13,731
10,388
43,663
22,719
88,673
207,577
—
239
34,743
—
—
—
—
—
—
—
—
—
—
—
—
Other long-term investments(3).............................................................................................................................
242,559
339,839
$
$
$
43,663
22,719
88,673
207,577
315,720
239
34,743
13,731
10,388
582,398
15,149
Total pension assets .................................................................................................................................. $
597,547
9
7
4
15
35
52
—
6
2
2
97
3
100
(1) A fund including marketable securities that mirror the S&P 500 index.
(2) Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the
obligations of the American Income Life Insurance Company Non-Exempt Employees Defined Benefit Pension Plan ("American Income
Pension Plan").
(3) Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited
partnership's net asset value per share or its equivalent (NAV),AA
fair value. The Globe Life Inc. Pension Plan owns
less than 1% of the investment fund. As of December 31, 2021, the expected term of the investment fund is approximately 3 years and the
commitment of the investment is fully funded. The investment is non-redeemable.
as a practical expedient forff
98
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Pension Assets by Component at December 31, 2020
Fair Value Determined by:
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Amount
% to
Total
Corporate bonds:
Financial................................................... $
— $
52,252
$
— $
52,252
Utilities......................................................
Energy......................................................
Other corporates.....................................
Total corporate bonds ............................
Exchange traded fund(1)...........................
Other bonds ...............................................
Guaranteed annuity contract(2)................
Short-term investments............................
Other ...........................................................
—
—
—
—
245,170
—
—
20,960
7,109
45,888
22,480
88,983
209,603
—
258
30,119
—
—
—
—
—
—
—
—
—
—
—
—
Other long-term investments(3).............................................................................................................................
239,980
273,239
$
$
$
45,888
22,480
88,983
209,603
245,170
258
30,119
20,960
7,109
513,219
16,313
Total pension assets ..................................................................................................................................... $
529,532
10
9
4
17
40
46
—
6
4
1
97
3
100
(1) A fund including marketable securities that mirror the S&P 500 index.
(2) Representing a guaranteed annuity contract issued by Globe Life Inc.'s subsidiary, American Income Life Insurance Company, to fund the
obligations of the American Income Life Insurance Company Non-Exempt Employees Defined Benefit Pension Plan ("American Income
Pension Plan").
(3) Included in other long-term investments is an investment fund that reports the Globe Life Inc. Pension Plan's pro-rata share of the limited
fair value. The Globe Life Inc. Pension Plan owns
partnership's net asset value per share or its equivalent (NAV),AA
approximately 1% of the investment fund. As of December 31, 2020, the expected term of the investment fund was approximately 4 years
and the commitment of the investment is fully funded. The investment is non-redeemable.
as a practical expedient forff
Globe Life's investment objectives for its plan assets include preservation of capital and purchasing power as well
as long-term growth. Globe Life seeks to preserve capital through investments made in high quality securities with
adequate diversification by issuer and industry sector to minimize risk. The portfolio is monitored continuously for
changes in quality and diversification mix. The preservation of purchasing power is intended to be accomplished
through asset growth, exclusive of contributions and withdrawals in excess of the rate of inflation. Globe Life intends
to maintain investments that when combined with future plan contributions will produce adequate long-term growth
to provide for all plan obligations. It is also Globe Life's objective that the portfolio’
s investment return will meet or
exceed the return of a balanced market index.
ff
The majority of the securities in the portfolioff
projected payments. There are no specific policies calling for asset durations to match those of benefit obligations.
are highly marketable so that there will be adequate liquidity to meet
Allowed investments are limited to equities, fixed maturities, and short-term investments (invested cash). The assets
are to be invested in a mix of equity and fixed income investments that best serve the objectives of the pension
plan. Factors to be considered in determining the asset mix include funded status, annual pension expense, annual
pension contributions, and balance sheet liability. Equities can include common and preferred stocks, securities
convertible into equities, mutual funds and exchange traded funds that invest in equities, equity interests in limited
partnerships, and other equity-related investments. Primarily, equities are listed on major exchanges and adequate
market liquidity is required. Fixed maturities primarily consist of marketable debt securities rated investment grade
at purchase by a major rating agency. Short-term investments include fixed maturities with maturities less than one
year and invested cash. Investments outside of the aforementioned list are not permitted, except by prior approval
of the Plan’s Trustees.
99
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The investment portfolio is well diversified to avoid undue exposure to a single sector, industry, business, or security.
The equity and fixed maturity portfolios are not permitted to invest in any single issuer that would exceed 10% of
total plan assets at the time of purchase. The Company does not employ any other special risk management
techniques, such as derivatives, in managing the pension investment portfolio.
Globe Life's equity securities include an exchange traded fund that mirrors the S&P 500 index which better aligns
with a passive approach rather than an actively managed portfolio. At December 31, 2021, there were no restricted
investments contained in the portfolio. Plan contributions have been invested primarily in fixed maturity and equity
securities during the three years ended December 31, 2021.
SERP: The following tables include premiums paid for the company owned life insurance (COLI) for the three years
ended December 31, 2021 and investments of the Rabbi Trust for the two years ended December 31, 2021.
Premiums paid for insurance coverage.................................................................. $
2,193
$
2,480
$
2,394
Year Ended December 31,
2021
2020
2019
Total investments:
COLI ...................................................................................................................................................... $
52,791
$
Exchange traded funds ......................................................................................................................
87,133
51,361
75,390
$
139,924
$
126,751
At December 31,
2021
2020
Pension Liability:y The following table presents projected benefit obligation (PBO) and accumulated benefit obligation
(ABO) forff
the pension plans and SERP at December 31, 2021 and 2020.
Pension Liability
December 31,
2021
2020
PBO
ABO
PBO
ABO
Pension plans.............................................................................. $
686,917
$
601,647
$
667,753
$
594,510
SERP ............................................................................................
92,017
87,915
95,560
89,069
Benefit Obligation ................................................................ $
778,934
$
689,562
$
763,313
$
683,579
The pension plans have projected benefit obligations in excess of the fair value of plan assets. The projected benefit
obligations and the fair value of plan assets were as follows:
Funded benefit pension plans PBO........................................................................................................ $
686,917
$
Funded benefit pension plans fair value of plan assets......................................................................
597,547
667,753
529,532
At December 31,
2021
2020
100
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The funded benefit pension plans have accumulated benefit obligations in excess of the fair value of plan assets.
The accumulated benefit obligations and the fair value of plan assets were as follows:
At December 31,
2021
2020
Funded benefit pension plans ABO........................................................................................................ $
601,647
$
Funded benefit pension plans fair value of plan assets......................................................................
597,547
594,510
529,532
The following table discloses the assumptions used to determine Globe Life's pension liabilities and costs for the
appropriate periods. The discount and compensation increase rates are used to determine current year projected
benefit obligations and subsequent year pension expense. The long-term rate of return is used to determine current
year expense. Differences between assumptions and actual experience are included in actuarial gain or loss.
Weighted Average Pension Plan Assumptions
For Benefit Obligations at December 31:
Discount rate .........................................................................................................................................
Rate of compensation increase..........................................................................................................
2021
2020
3.19 %
4.43
2.92 %
3.97
For Periodic Benefit Cost for the Year:
2021
2020
2019
Discount rate ............................................................................................................
2.92 %
3.49 %
4.37 %
Expected long-term returns....................................................................................
Rate of compensation increase.............................................................................
6.67
3.97
6.67
3.97
6.72
4.00
The discount rate is determined based on the expected duration of plan liabilities. A yield is then derived based on
the current market yield of a hypothetical portfolio of high quality corporate bonds that match the liability's average
life. The rate of compensation increase is projected based on Company experience, modified as appropriate for
future expectations. The expected long-term rate of return on plan assets is management’s best estimate of the
average rate of earnings expected to be received on the assets invested in the plan over the benefit period. In
determining this assumption, consideration is given to the historical rate of return earned on the assets, the
projected returns over future periods, and the discount rate used to compute benefit obligations.
Net periodic benefit cost for the defined benefit plans by expense component was as follows:
Service cost—benefits earned during the period .................................................. $
Interest cost on projected benefit obligation...........................................................
Expected return on assets ........................................................................................
Amortization of prior service cost (credit) ...............................................................
Recognition of actuarial gain (loss)..........................................................................
Year Ended December 31,
2021
2020
2019
31,672
$
24,461
$
21,957
(32,331)
631
19,849
22,825
(29,561)
632
15,469
19,929
23,827
(27,862)
8,211
29
Net periodic benefit cost .................................................................................... $
41,778
$
33,826
$
24,134
101
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of the impact on other comprehensive income (loss) concerning pensions and other postretirement
benefits is as follows:
ff
Year Ended December 31,
2021
2020
2019
Balance at January 1 .............................................................................................. $
(208,770) $
(182,233) $
(150,071)
Amortization of:
Prior service cost (credit)......................................................................................
Net actuarial (gain) loss(1).....................................................................................
Total amortization................................................................................................
Plan amendments....................................................................................................
Experience gain (loss)(2) .........................................................................................
Balance at December 31 ........................................................................................ $
631
20,166
20,797
(4,565)
61,299
632
16,000
16,632
—
631
7,843
8,474
—
(43,169)
(40,636)
((
(131,239) $
(
))
)
((
(208,770) $
(
))
)
))
(182,233)
((
)
(
(1) Includes amortization of postretirement benefits other than pensions of $228 thousand in 2021, $302 thousand in 2020, and $265 thousand in
2019.
(2) The increase in the experience gain (loss) is related to an increase discount rate.
The following table presents a reconciliation from the beginning to the end of the year of the PBO and plan assets
for the pension plans and SERP. This table also presents the amounts previously recognized as a component of
accumulated other comprehensive income.
Pension Benefits
Year Ended December 31,
2021
2020
Changes in PBO:
PBO at beginning of year...................................................................................................................... $
763,313
$
665,207
Service cost...........................................................................................................................................
Interest cost...........................................................................................................................................
Plan amendments ................................................................................................................................
Actuarial loss (gain) .............................................................................................................................
Benefits paid .........................................................................................................................................
PBO at end of year.................................................................................................................................
Changes in plan assets:
Fair value at beginning of year.............................................................................................................
Return on assets ..................................................................................................................................
Contributions.........................................................................................................................................
Benefits paid .........................................................................................................................................
Fair value at end of year .......................................................................................................................
31,672
21,957
4,565
(16,938)
(25,635)
778,934
529,532
75,792
17,858
(25,635)
597,547
24,461
22,825
—
74,006
(23,186)
763,313
468,763
62,104
21,851
(23,186)
529,532
Funded status at year end ................................................................................................................... $
((
(181,387) $
(
))
)
))
(233,781)
((
)
(
Changes in the PBO related to actuarial losses (gains) are primarily attributed to changes in the discount rate.
Amounts recognized in accumulated other comprehensive income consist of:
2021
2020
Net loss (gain)......................................................................................................................................... $
120,217
$
200,465
Prior service cost....................................................................................................................................
8,647
4,713
Net amounts recognized at year end .................................................................................................. $
128,864
$
205,178
Year Ended December 31,
102
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Globe Life has estimated its expected pension benefits to be paid over the next ten years as of December 31, 2021.
These estimates use the same assumptions that measure the benefit obligation at December 31, 2021, taking
estimated future employee service into account. Those estimated benefits are as follows:
ff
For the year(s):
2022............................................................................................................................................................................................. $
25,979
2023.............................................................................................................................................................................................
2024.............................................................................................................................................................................................
2025.............................................................................................................................................................................................
2026.............................................................................................................................................................................................
28,431
30,936
32,120
34,121
2027-2031..................................................................................................................................................................................
200,165
Note 10—Supplemental Disclosures of Cash Flow Information
The following table summarizes Globe Life's noncash transactions, which are not reflected on the Consolidated
Statett ments ott
f Cash Flows:
Year Ended December 31,
2021
2020
2019
Stock-based compensation not involving cash...................................................... $
30,272
$
35,892
$
Commitments for low-income housing interests....................................................
Exchanges of fixed maturity investments ...............................................................
Net unsettled security trades ....................................................................................
Noncash tax credits....................................................................................................
177,010
109,226
6,963
1,883
161,503
219,807
1,669
—
44,843
51,978
243,156
8,421
—
The following table summarizes certain amounts paid during the period:
Interest paid................................................................................................................. $
83,072
$
83,518
$
Income taxes paid ......................................................................................................
96,218
76,701
81,723
101,982
Year Ended December 31,
2021
2020
2019
103
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 11—Debt
The following table presents information about the terms and outstanding balances of Globe Life's debt.
Selected Information about Debt Issues
As of December 31,
2021
2020
Maturity
Date
Coupon
Rate
Par
Value
Unamortized
Discount &
Issuance
Costs
Book
Value
Fair
Value
Book
Value
5/15/2023
7.875% $ 165,612
$
(396) $ 165,216
$ 180,444
$ 164,954
Instrument
Issue Date
Senior notes ............. 5/27/1993
Senior notes(1).......... 9/24/2012
Senior notes ............. 9/27/2018
9/15/2028
4.550%
Senior notes ............. 8/21/2020
8/15/2030
2.150%
9/15/2022
3.800%
150,000
550,000
400,000
(248)
149,752
(5,051)
(4,222)
544,949
395,778
153,284
625,801
395,208
149,414
544,328
395,157
Junior subordinated
debentures(2) ............
—
—
—
—
—
—
—
290,652
Junior subordinated
debentures................ 11/17/2017
Junior subordinated
debentures................ 6/14/2021
11/17/2057
5.275%
125,000
(1,604)
123,396
128,856
123,381
6/15/2061
4.250%
325,000
(7,845)
317,155
336,700
—
1,715,612
(19,366)
1,696,246
1,820,293
1,667,886
Less current maturity of long-term debt(1) ...............................
150,000
(248)
149,752
153,284
—
Total long-term debt ..........................................................
1,565,612
(19,118)
1,546,494
1,667,009
1,667,886
Current maturity of long-term debt(1) ........................................
Commercial paper.......................................................................
Total short-term debt .........................................................
150,000
330,033
480,033
(248)
(141)
(389)
149,752
329,892
479,644
153,284
329,892
483,176
—
254,918
254,918
Total debt ........................................................................ $2,045,645
$
(
(19,507) $2,026,138
(
)
)
$2,150,185
$1,922,804
(1) An additional $150 million par value and book value is held by insurance subsidiaries that eliminates in consolidation.
(2) The $300 million of 6.125% Junior subordinated debentures were redeemed on July 15, 2021.
The commercial paper has the highest priority of all the debt, fol
lowed by senior notes then junior subordinated
debentures. The senior notes due 2023 are noncallable, the remaining senior notes are callable under a make-
whole provision, and the junior subordinated debentures are subject to an optional redemption five years from
issuance. Interest on the 4.25% junior subordinated debentures is payable quarterly while all other long-term debt is
payable semi-annually.
ff
Contractu
tt
contractual debt obligations:
al Debt Obligations
ttg
: The following table presents expected scheduled principal payments under our
Debt obligations......................................... $
480,033
$
165,612
$
— $
— $
— $ 1,400,000
2022
2023
2024
2025
2026
Thereafter
Year Ended December 31,
Credit Facilitii yty:yy On September 30, 2021, Globe Life amended the credit agreement dated August 24, 2020, which
provides for a $750 million revolving credit facility that may be increased to $1 billion. The amended credit facility
matures September 30, 2026, and may be extended up to two one-year periods upon the Company's request.
Pursuant to this agreement, the participating lenders have agreed to make revolving loans to Globe Life and to
issue secured or unsecured letters of credit. The Company has not drawn on any of the credit to date.
104
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
The facility is further designated as a back-up credit line for a commercial paper program under which the Company
may either borrow from the credit
line or issue commercial paper at any time, with total commercial paper
outstanding not to exceed the facility maximum of $750 million, less any letters of credit issued. Interest is charged
at variable rates.
to certain covenants regarding
In accordance with the agreement, Globe Life is subject
capitalization. As of December 31, 2021, the Company was in full compliance with these covenants.
Commercial paper outstanding and any long-term debt due within one year are reported as short-term debt on the
Consolidated Balance Sheets. A table presenting selected informat
ion concerning Globe Life's commercial paper
borrowings is presented below.
ff
Credit Facility - Commercial Paper
At December 31,
Balance at end of period (at par value).................................................................................................. $
330,033
Annualized interest rate............................................................................................................................
0.29 %
Letters of credit outstanding .................................................................................................................... $
125,000
Remaining amount available under credit line......................................................................................
294,967
2021
$
$
2020
255,000
0.27 %
135,000
360,000
Average balance outstanding during period........................................................... $
311,049
Daily-weighted average interest rate (annualized)................................................
0.23 %
Maximum daily amount outstanding during period................................................ $
465,033
2021
2020
318,409
1.50 %
482,000
$
$
2019
288,684
2.62 %
385,000
$
$
Year Ended December 31,
g
Long-term debt
: On June 14, 2021, Globe Life completed the issuance and sale of $325 million in aggregate
principal amount of 4.25% unsecured Junior Subordinated Debentures due June 15, 2061. The net proceeds from
the sale of the aforementioned Junior Subordinated Debentures were $317 million and were used to redeem the
$300 million 6.125% Junior Subordinated Debentures due 2056 plus accrued interest of $1.5 million on July 15,
2021 as well as forff
general corporate purposes.
(
)
g: During the year, fouff
r of our insurance subsidiaries became members of
Federal Home Loan Bank (FHLB) fB unff ding
the FHLB of Dallas. FHLB membership provides the insurance subsidiaries with access to various low cost
collateralized borrowings and funding agreements. The membership requires ownership of FHLB common stock
and Globe Life owns $7.9 million as of the end of the year. The FHLB stock is restricted for the duration of the
membership and recorded at cost (par) as required by applicable guidance. The FHLB stock is included in "Other
long-term investments" in the Consolidated Balance Sheetstt and activity is recorded in "Net receipts (payments)
from deposit-type products" in the Consolidated Statement of Cash Flows. As of December 31, 2021, there were no
outstanding borrowings with the FHLB.
105
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 12—Shareholders' Equity
Share Data:tt
A summary of common share activity is presented in the following chart.
Common Stock
Issued
Treasury
Stock
2019:
Balance at January 1, 2019..................................................................................................................
121,218,183
(10,525,147)
Grants of restricted stock ......................................................................................................................
Vesting of performance shares ............................................................................................................
Issuance of common stock due to exercise of stock options ..........................................................
Treasury stock acquired ........................................................................................................................
—
—
—
—
8,840
311,399
1,810,559
(5,103,591)
Retirement of treasury stock.................................................................................................................
(4,000,000)
4,000,000
Balance at December 31, 2019 ......................................................................................................
117,218,183
(9,497,940)
2020:
Grants of restricted stock ......................................................................................................................
Vesting of performance shares ............................................................................................................
Issuance of common stock due to exercise of stock options ..........................................................
Treasury stock acquired ........................................................................................................................
—
—
—
—
4,548
271,843
936,289
(5,135,439)
Retirement of treasury stock.................................................................................................................
(4,000,000)
4,000,000
Balance at December 31, 2020 ......................................................................................................
113,218,183
(9,420,699)
2021:
Grants of restricted stock ......................................................................................................................
Vesting of performance shares ............................................................................................................
Issuance of common stock due to exercise of stock options ..........................................................
Treasury stock acquired ........................................................................................................................
—
—
—
—
10,031
210,155
1,191,704
(5,642,036)
Retirement of treasury stock.................................................................................................................
(4,000,000)
4,000,000
Balance at December 31, 2021 ......................................................................................................
109,218,183
)
(9,650,845)
(
)
(
There was no activity related to the preferred stock in years 2019 through 2021.
q
of Common Shares
: Globe Life shares are acquired through open market purchases under the Globe
Acquisitiontt
Life stock repurchase program when it is determined to be the best use of Globe Life's excess cash flows. This
yields a return that is better than available alternatives and exceeds our cost of equity. When stock options are
exercised, proceeds from the exercises are generally used to repurchase approximately the number of shares
available with those funds in order to reduce dilution. See the following summary below:
Globe Life Share Repurchase Program
Share Repurchase for Dilution Purposes
Shares
Acquired
(in thousands)
Total Cost
Average
Price
Shares
Acquired
(in thousands)
2021 ................................................
4,784
$
455,030
$ 95.11
2020 ................................................
2019 ................................................
4,459
3,932
380,112
350,080
85.24
89.04
858
676
1,209
Total Cost
Average
Price
$
86,405
$ 100.75
63,754
109,489
94.28
90.52
106
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Restrict
: Restrictions exist on the flow of funds to Globe Life Inc. from its insurance subsidiaries. Statutory
tt
ions
tt
regulations require life insurance subsidiaries to maintain certain minimum amounts of capital and surplus.
Dividends from insurance subsidiaries of Globe Life Inc. are restricted based on regulations by their states of
domicile. Additionally, insurance company distributions are generally not permitted in excess of statutory surplus.
Subsidiaries are also subject
to certain minimum capital requirements. Subsidiaries of Globe Life paid cash
dividends to the Parent Company in the amount of $479 million in 2021, $486 million in 2020, and $480 million in
2019. As of December 31, 2021, dividends from insurance subsidiaries to the Parent Company available to be paid
in 2022 are limited to the amount of $347 million without regulatory approval, such that $1.2 billion was considered
restricted net assets of the subsidiaries. Dividends exceeding these limitations may be available during the year
pending regulatory approval. While there are no legal restrictions on the payment of dividends to shareholders from
Globe Life's retained earnings, retained earnings as of December 31, 2021, were restricted by lenders’ covenants
which require the Company to maintain and not distribute $4.3 billion from its total consolidated retained earnings of
$6.2 billion.
g p
Earnings per Share
computation of basic and diluted earnings per share is as follows:
: A reconciliation of basic and diluted weighted-average shares outstanding used in the
Year Ended December 31,
2021
2020
2019
Basic weighted average shares outstanding ........................................................
102,069,781
106,075,267
109,213,524
Weighted average dilutive options outstanding....................................................
1,100,351
1,149,327
2,167,726
Diluted weighted average shares outstanding......................................................
103,170,132
107,224,594
111,381,250
Antidilutive shares .....................................................................................................
2,412,884
2,476,019
21,556
Antidilutive shares are excluded from the calculation of diluted earnings per share. All antidilutive shares noted
above result from outstanding out of the money employee and Director stock options.
Note 13—Stock-Based Compensation
ff
Globe Life's stock-based compensation consists of stock options, restricted stock, restricted stock units, and
performance
shares. Certain employees and members of the board of directors (directors) have been granted fixed
equity options to buy shares of Globe Life stock at the market value of the stock on the date of grant, under the
provisions of the Globe Life stock option plans. The options are exercisable during the period commencing from the
date they vest until expiring according to the terms of the grant. Options generally expire the earlier of employee
termination or option contract term, which are either seven-year or ten-year terms. Options generally vest in
accordance with the following schedule:
Contract
Period
6 Months
Year 1
Year 2
Year 3
Year 4
Year 5
Shares vested by period
Directors ........................................
7 years
100%
Employees .....................................
7 years
Employees ....................................
10 years
—%
—%
—%
—%
—%
—%
50%
25%
—%
50%
25%
—%
—%
25%
—%
—%
25%
All employee options vest immediately upon retirement on or after the attainment of age 65, upon death, or
disability. Globe Life generally issues shares for the exercise of stock options from treasury stock. The Company
generally uses the proceeds from option exercises to buy shares of Globe Life common stock in the open market to
reduce the dilution from option exercises.
107
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of shares available for grant is as follows:
Available for Grant
2021
2020
2019
Balance at January 1, ....................................................................................................
Expired and forfeited during year(1,2).........................................................................
Options granted during year(1) ...................................................................................
Restricted stock, restricted stock units, and performance shares granted(2) .....
Balance at December 31, .............................................................................................
5,984,418
7,167,718
9,422,760
39,559
38,820
20,800
(1,091,495)
(1,127,610)
(1,149,542)
(205,394)
(94,510)
(1,126,300)
4,727,088
5,984,418
7,167,718
(1) Plan allows for grant of options such that each grant reduces shares available for grant in a range from 0.85 share to 1.0 share.
(2) Plan allows forff
grant of restricted stock such that each stock grant reduces shares available for grant in a range from 3.10 shares to 3.88
shares.
A summary of stock compensation activity for each of the three years ended December 31, 2021, is presented
below:
Stock-based compensation expense recognized(1) ..................................................... $
Tax benefit recognized......................................................................................................
30,272
$
35,892
$
11,954
12,550
44,843
21,197
2021
2020
2019
(1) No stock-based compensation expense was capitalized in any period in accordance with applicable GAAP.
Additional stock compensation informat
ff
ion is as follows at December 31:
Unrecognized compensation(1) .................................................................................................................... $
Weighted average period of expected recognition (in years)(1) ..............................................................
26,602
$
28,125
0.57
0.65
2021
2020
(1) Includes restricted stock and performance shares.
No equity awards were cash settled during the three years ended December 31, 2021.
Options:
ttp
The following table summarizes informat
ff
ion about stock options outstanding at December 31, 2021.
Range of
Exercise Prices
$29.59 - $77.26
82.56 - 83.17
87.60 - 90.21
92.40 - 98.32
100.74 - 105.56
$29.59 - $105.56
Options Outstanding
Options Exercisable
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price
2.78 $
4.14
4.18
6.15
5.14
4.31 $
66.39
82.56
87.64
98.28
100.85
85.11
Number
Exercisable
1,916,991
$
623,227
1,064,406
10,212
44,919
3,659,755
$
$
Weighted-
Average
Exercise
Price
65.78
82.57
87.65
92.98
104.10
75.55
Number
Outstanding
2,025,118
1,262,467
1,299,366
1,284,112
1,326,599
7,197,662
108
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of option activity for each of the three years ended December 31, 2021, is as follows:
2021
2020
2019
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Options
Weighted-
Average
Exercise
Price
Options
Outstanding—beginning of year ..............
7,111,231
$
78.28
6,724,358
$
70.07
7,203,765
$
61.72
Granted:
7-year term................................................
1,284,112
Exercised........................................................
(1,191,704)
Expired and forfeited ....................................
(5,977)
Outstanding—end of year ..........................
7,197,662
Exercisable at end of year ..........................
3,659,755
$
$
1,326,599
100.85
1,352,402
98.28
58.59
74.15
85.11
(936,289)
(3,437)
7,111,231
75.55
3,389,399
51.37
75.27
78.28
(1,810,559)
(21,250)
6,724,358
67.19
2,999,788
$
$
82.43
45.93
82.89
70.07
57.27
$
$
Additional informat
ff
ion about Globe Life's stock option activity as of December 31, 2021 and 2020 is as follows:
Outstanding options:
Weighted-average remaining contractual term (in years)................................................................
4.31
4.57
Aggregate intrinsic value....................................................................................................................... $
77,329
$
126,467
2021
2020
Exercisable options:
Weighted-average remaining contractual term (in years)................................................................
3.27
3.42
Aggregate intrinsic value....................................................................................................................... $
66,978
$
94,527
Selected stock option activity for the three years ended December 31, 2021, is presented below:
Weighted-average grant-date fair value of options granted
(per share) ................................................................................................................... $
18.01
$
14.64
$
Intrinsic value of options exercised..........................................................................
Cash received from options exercised....................................................................
Actual tax benefit received........................................................................................
50,641
69,826
10,545
40,517
48,093
8,508
14.20
82,022
83,163
17,225
2021
2020
2019
Additional informat
ff
ion concerning Globe Life's unvested options is as follows
ff
at December 31:
2021
2020
Number of shares outstanding................................................................................................................
3,537,907
3,721,832
Weighted-average exercise price (per share)....................................................................................... $
94.99
$
Weighted-average remaining contractual term (in years)...................................................................
5.37
88.37
5.62
Aggregate intrinsic value.......................................................................................................................... $
10,352
$
31,941
Globe Life expects that substantially all unvested options will vest.
Restrict
ed Stock: Restricted stock grants consist of time-vested grants, restricted stock units, and performance
tt
shares. Time-vested restricted stock is available to directors and vests over six months. Restricted stock units are
also available to directors. The restricted stock units vest over six months and are not converted to shares until the
directors’ retirement, death, or disability. Director restricted stock and restricted stock units are generally granted on
shares are granted to a limited number of senior executives.
the first business day of the year. Performance
Performance shares have a three-year performance
period and are not settled in shares until the certification of the
period. While the grant specifies a stated target number of shares, the determination of the
three-year performance
ff
ff
ff
ff
109
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
actual settlement in shares will be based on the achievement of certain performance
the three-year performance
related to age that could accelerate vesting.
period. Certain executive restricted stock and performance
ff
ff
ff
objectives of Globe Life over
share grants contain terms
Following are the restricted stock units outstanding for each of the three years ended December 31, 2021. All
restricted stock units were fully vested at the end of each year of grant.
2019...........................................................................................................................................................................
2020...........................................................................................................................................................................
2021...........................................................................................................................................................................
Year of grants
Outstanding as of
year end
71,006
77,167
84,426
Below is the final determination of the performance share grants in 2017 to 2019:
Year of grants
Final settlement of
shares
Final settlement date
2017.............................................................................................................................
2018.............................................................................................................................
2019.............................................................................................................................
271,843
210,155
66,751
February 26, 2020
February 24, 2021
February 23, 2022
For the 2020 and 2021 performance
thousand for the 2020 grants and 0 to 209 thousand shares for the 2021 grants.
ff
share grants, actual shares that could be distributed range from 0 to 227
A summary of restricted stock grants forf
presented in the table below.
each of the years in the three-year period ended December 31, 2021, is
2021
2020
2019
Directors restricted stock:
Shares............................................................................................................................
10,031
Price per share ............................................................................................................. $
92.40
Aggregate value ........................................................................................................... $
927
Percent vested as of 12/31/2021...............................................................................
97%
Directors restricted stock units (including dividend equivalents):
Shares............................................................................................................................
Price per share ............................................................................................................. $
Aggregate value ........................................................................................................... $
7,258
92.60
672
Percent vested as of 12/31/2021...............................................................................
96%
Performance shares:
Target shares................................................................................................................
139,500
Target price per share ................................................................................................. $
98.32
Aggregate value ........................................................................................................... $
13,716
4,548
105.56
480
100%
6,161
103.32
637
100%
151,200
100.74
15,232
$
$
$
$
$
$
$
$
$
$
$
$
8,840
76.37
675
100%
6,634
77.50
514
100%
156,500
82.56
12,921
Percent vested as of 12/31/2021...............................................................................
—%
—%
—%
Time-vested restricted stockholders are entitled to dividend payments on the unvested stock. Restricted stock unit
holders are entitled to dividend equivalents. These equivalents are granted in the form of additional restricted stock
immediately upon grant. Dividend equivalents are applicable only to restricted stock units.
units and vest
Performance shareholders are not entitled to dividend equivalents and are not entitled to dividend payments until
the shares are vested and settled.
110
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
An analysis of nonvested restricted stock is as follows:
Executive
Restricted
Stock
Executive
Performance
Shares
Directors
Restricted
Stock
Directors
Restricted
Stock
Units
2019:
Balance at December 31, 2018....................
12,000
Grants ....................................................................
Additional performance shares(1).......................
Restriction lapses.................................................
Forfeitures .............................................................
Balance at December 31, 2019....................
2020:
Grants ....................................................................
Additional performance shares(1).......................
Restriction lapses.................................................
Forfeitures .............................................................
Balance at December 31, 2020....................
2021:
Grants ....................................................................
Additional performance shares(1).......................
Restriction lapses.................................................
Forfeitures .............................................................
Balance at December 31, 2021....................
Total
764,629
171,974
118,812
752,629
156,500
118,812
—
8,840
—
—
6,634
—
—
—
(12,000)
(311,399)
(8,840)
(6,634)
(338,873)
—
—
—
—
—
—
—
—
—
—
—
—
—
716,542
151,200
(65,473)
(271,843)
(11,450)
518,976
139,500
(94,883)
(210,155)
(11,050)
342,388
—
—
4,548
—
(4,548)
—
—
10,031
—
(9,742)
—
289
—
—
6,161
—
—
716,542
161,909
(65,473)
(6,161)
(282,552)
—
—
7,258
—
(11,450)
518,976
156,789
(94,883)
(6,969)
(226,866)
—
289
(11,050)
342,966
(1) Estimated additional (reduced) share grants expected due to achievement of performance criteria.
An analysis of the weighted-average grant-date fair values per share of nonvested restricted stock is as follows for
the year 2021:
Executive
Restricted
Stock
Executive
Performance
Shares
Directors
Restricted
Stock
Directors
Restricted
Stock Units
Grant-date fair value per share at January 1, 2021 ............... $
— $
90.13
$
— $
Grants..................................................................................................
Estimated additional performance shares.....................................
Restriction lapses..............................................................................
Forfeitures ..........................................................................................
Grant-date fair value per share at December 31, 2021 .........
—
—
—
—
—
98.32
(91.43)
(87.60)
(87.60)
94.75
92.40
—
(92.40)
—
92.56
—
92.41
—
(92.41)
—
92.56
111
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Note 14—Business Segments
Globe Life is organized into four segments:
investments. In addition, other expenses not included in these segments are reported in "Corporate & Other."
life insurance, supplemental health insurance, annuities, and
Globe Life's reportable insurance segments are based on the insurance product lines it markets and administers:
life insurance, supplemental health insurance, and annuities. These major product lines are set out as reportable
segments because of the common characteristics of products within these categories, comparability of margins, and
the similarity in regulatory environment and management techniques. There is also an investment segment which
the insurance segments and the corporate function. The
manages the investment portfolio,
Company's chief operating decision makers evaluate the overall performance
of the operations of the Company in
accordance with these segments.
debt, and cash flow forff
ff
ff
Life insurance products marketed by Globe Life include traditional whole life and term life insurance. An immaterial
amount of annuities sold as companion products are included in the life segment. Health insurance products are
generally guaranteed renewable and include Medicare Supplement, critical
illness, accident, and limited-benefit
supplemental hospital and surgical coverage. Annuities include fixed-benefit contracts.
Globe Life markets its insurance products through a number of distribution channels, each of which sells the
products of one or more of Globe Life's insurance segments. Our distribution channels consist of the following
exclusive agencies: American Income Life Division (American Income), Liberty National Division (Liberty National)
and Family Heritage Division (Family Heritage); an independent agency, United American Division (United
American); and our Direct to Consumer Division (Direct to Consumer). The tables below present segment premium
revenue by each of Globe Life's distribution channels.
ff
Premium Income by Distribution Channel
For the Year 2021
Life
Health
Annuity
Total
Distribution Channel
Amount
% of
Total
American Income ................................ $ 1,402,878
Direct to Consumer.............................
Liberty National ...................................
United American..................................
Family Heritage ...................................
971,461
311,081
8,822
4,957
Other .....................................................
199,011
48
34
11
—
—
7
Amount
$
114,950
73,946
187,327
481,614
343,839
—
% of
Total
Amount
% of
Total
Amount
% of
Total
—
—
—
1
—
—
1
— $ 1,517,828
—
—
100
—
—
1,045,407
498,408
490,437
348,796
199,011
37
25
12
12
9
5
100
$ 4,099,887
100
$ 2,898,210
100
$ 1,201,676
100
$
Life
Health
Annuity
Total
For the Year 2020
% of
Total
Amount
% of
Total
Amount
% of
Total
Distribution Channel
Amount
% of
Total
American Income ................................ $ 1,257,726
Direct to Consumer.............................
Liberty National ...................................
United American..................................
Family Heritage ...................................
906,959
293,897
9,688
4,253
Other .....................................................
200,281
47
34
11
—
—
8
Amount
$
105,734
76,527
188,835
452,980
317,021
—
$ 2,672,804
100
$ 1,141,097
100
$
—
—
—
4
—
—
4
— $ 1,363,460
—
—
100
—
—
983,486
482,732
462,672
321,274
200,281
36
26
13
12
8
5
100
$ 3,813,905
100
$
9
6
16
40
29
—
$
9
7
16
40
28
—
112
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Life
Health
Annuity
Total
For the Year 2019
Distribution Channel
Amount
% of
Total
American Income ................................. $ 1,160,495
Direct to Consumer ..............................
Liberty National.....................................
United American ...................................
Family Heritage.....................................
855,543
285,551
10,571
3,830
Other.......................................................
201,794
46
34
11
1
—
8
Amount
$
99,447
77,557
189,578
416,582
294,182
—
$
9
7
18
39
27
—
$ 2,517,784
100
$ 1,077,346
100
$
—
—
—
4
—
—
4
— $ 1,259,942
—
—
100
—
—
933,100
475,129
427,157
298,012
201,794
35
26
13
12
8
6
100
$ 3,595,134
100
% of
Total
Amount
% of
Total
Amount
% of
Total
Due to the nature of the life insurance industry, Globe Life has no individual or group which would be considered a
major customer. Substantially all of Globe Life's business is conducted in the United States.
other income and administrative expenses,
The measure of profitability established by the chief operating decision makers for insurance segments is
underwriting margin beforeff
in accordance with the manner the
segments are managed. This measure represents gross profit margin on insurance products before insurance
administrative expenses and consists primarily of premium less net policy benefits, acquisition expenses, and
commissions. Required interest on net policy liabilities (benefit reserves less deferred acquisition costs) is reflected
as a component of the Investment segment (rather than as a component of underwriting margin in the insurance
and annuity segments) in order to match this cost with the investment income earned on the assets supporting the
net policy liabilities.
The measure of profitability forff
the Investment segment is excess investment income, which represents the income
earned on the investment portfolio in excess of net policy requirements and financing costs associated with Globe
Life's debt. Other than the above-mentioned interest allocations and an intersegment commission, there are no
other intersegment revenues or expenses. Expenses directly attributable to corporate operations are included in the
“Corporate & Other” category. Stock-based compensation expense is considered a corporate expense by Globe Life
management and is included in this category. All other unallocated revenues and expenses on a pretax basis,
including insurance administrative expense, are also included in the “Corporate & Other” segment category.
ff
to support its insurance liabilities, the yield from which is used to
Globe Life holds a sizable investment portfolioff
offset
policy benefit, acquisition, administrative and tax expenses. This yield or investment income is taken into
account when establishing premium rates and profitability expectations of its insurance products. From time to time,
investments are sold, called, or experience a credit loss event, each of which are reflected by the Company as
realized gain (loss)—investments. These gains or losses generally occur as a result of disposition due to issuer
calls, compliance with Company investment policies, or other reasons often beyond management’s control. Unlike
investment income, realized gains and losses are incidental to insurance operations, and only overall yields are
considered when setting premium rates or insurance product profitability expectations. While these gains and losses
are not relevant to segment profitability or core operating results, they can have a material positive or negative
result on net income. For these reasons, management removes realized investment gains and losses when it views
its segment operations.
Management removes items that are related to prior periods when evaluating the operating results of current
periods. Management also removes non-operating items unrelated to its core insurance activities when evaluating
those results. Therefore, these items are excluded in its presentation of segment results, because accounting
guidance requires that operating segment results be presented as management views its business. With the
exception of the administrative settlements noted in the paragraphs above, all of these items are included in “Other
operating expense” in the Consolidated Statements ott
f OpeO rations for the appropriate year. See additional detail
below in the tables.
113
GL 2021 FORM 10-K
—
—
—
—
$ 4,099,887
952,447
1,216
5,053,550
1,325
(2)
2,859,616
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
lowing tables set forth a reconciliation of Globe Life's revenues and operations by segment to its major
ion concerning
Accountingtt
The folff
income statement line items. See Note—1 Signif
ff
icant
reconciling items of segment profits to pretax income.
Policies for additional
informat
ff
i
Year Ended December 31, 2021
Life
Health
Annuity
Investment
Corporate
& Other
Adjustments
Consolidated
Revenue:
Premium................................................... $ 2,898,210
$1,201,676
$
1
$
— $
— $
Net investment income ..........................
Other income...........................................
—
—
—
—
Total revenue .....................................
2,898,210
1,201,676
—
—
1
952,447
—
952,447
—
1,216
1,216
Expenses:
Policy obligations....................................
2,070,485
758,745
29,061
—
Required interest on reserves ..............
(735,282)
(102,574)
(39,966)
877,822
Required interest on DAC .....................
218,575
28,556
258
(247,389)
Amortization of acquisition costs..........
486,724
115,194
1,920
Commissions, premium taxes, and
non-deferred acquisition costs .............
Insurance administrative expense(1) ....
Parent expense.......................................
Stock-based compensation expense ..
Interest expense .....................................
234,033
97,453
—
—
—
—
—
—
—
—
24
—
—
—
—
—
—
—
—
—
83,486
—
—
—
—
—
—
—
—
—
271,631
10,398
(3,4)
9,553
30,272
—
175
(4)
—
—
Total expenses ..................................
2,274,535
897,374
(8,703)
713,919
311,456
11,898
Subtotal .......................................................
623,675
304,302
8,704
238,528
(310,240)
(11,898)
—
—
603,838
331,510
282,029
9,728
30,272
83,486
4,200,479
853,071
Non-operating items...............................
—
—
—
—
—
11,898
(2,3,4)
11,898
Measure of segment profitability
(pretax) ............................................. $ 623,675
$ 304,302
$ 8,704
$ 238,528
$ (310,240) $
(
(
)
)
—
864,969
Realized gain (loss)—investments ..........................................................................................................................................................
Realized loss—redemption of debt(5) ......................................................................................................................................................
Administrative settlements........................................................................................................................................................................
Legal proceedings......................................................................................................................................................................................
Non-operating expenses...........................................................................................................................................................................
68,633
(9,314)
(1,325)
(8,139)
(2,434)
Income before income taxes per Consolidated Statements of Operations ............................................................................
$
912,390
(1) Administrative expense is not allocated to insurance segments.
(2) Administrative settlements.
(3) Legal proceedings.
(4) Non-operating expenses.
(5) In July, 2021, the Company redeemed the $300 million 6.125% junior subordinated notes due in 2056, and realized a loss of $9.3 million.
Refer to Note 11—Debt for further discussion.
114
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Life
Health
Annuity
Investment
Corporate
& Other
Adjustments
Consolidated
Year Ended December 31, 2020
Revenue:
Premium ...................................................... $2,672,804
$1,141,097
$
4
$
— $
— $
Net investment income .............................
Other income ..............................................
—
—
—
—
Total revenue ........................................
2,672,804
1,141,097
—
—
4
927,062
—
927,062
—
1,325
1,325
Expenses:
Policy obligations .......................................
1,809,373
733,481
30,030
—
Required interest on reserves
rr
..................
(698,112)
(93,475)
(41,413)
833,000
Required interest on DAC ........................
210,152
26,586
328
(237,066)
Amortization of acquisition costs.............
463,586
110,177
2,007
Commissions, premium taxes, and non-
deferred acquisition costs.........................
Insurance administrative expense(1) .......
Parent expense ..........................................
Stock-based compensation expense......
Interest expense ........................................
212,859
91,959
—
—
—
—
—
—
—
—
23
—
—
—
—
—
—
—
—
—
86,704
—
—
—
—
—
9,891
35,892
—
Total expenses......................................
1,997,858
868,728
(9,025)
682,638
296,730
Subtotal...........................................................
674,946
272,369
9,029
244,424
(295,405)
—
—
—
—
—
—
—
—
—
$ 3,813,905
927,062
1,325
4,742,292
2,572,884
—
—
575,770
304,841
323
(3)
—
—
4,308
(4,308)
10,214
35,892
86,704
3,841,237
901,055
250,947
3,985
(2,3)
254,932
Non-operating items ..................................
—
—
—
—
—
4,308
(2,3)
4,308
Measure of segment profitability
(pretax) ................................................. $ 674,946
$ 272,369
$ 9,029
$ 244,424
$ (295,405) $
)
)
(
(
—
905,363
Realized gain (loss)—investments ...........................................................................................................................................................
Realized loss—redemption of debt...........................................................................................................................................................
Legal proceedings .......................................................................................................................................................................................
Non-operating expenses ............................................................................................................................................................................
(3,737)
(634)
(3,275)
(1,033)
Income before income taxes per Consolidated Statements of Operations ..............................................................................
$
896,684
(1) Administrative expense is not allocated to insurance segments.
(2) Legal proceedings.
(3) Non-operating expenses.
115
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Year Ended December 31, 2019
Life
Health
Annuity
Investment
Corporate
& Other
Adjustments
Consolidated
Revenue:
Premium ...................................................... $2,517,784
$1,077,346
$
Net investment income .............................
Other income ..............................................
—
—
—
—
Total revenue ......................................... 2,517,784
1,077,346
4
—
—
4
$
— $
— $
910,459
—
910,459
—
1,318
1,318
Expenses:
Policy obligations ........................................ 1,638,053
687,764
31,532
—
Required interest on reserves...................
(666,168)
(87,289)
(43,522)
796,979
Required interest on DAC .........................
202,502
25,435
494
(228,431)
Amortization of acquisition costs..............
436,881
112,825
2,020
Commissions, premium taxes, and non-
deferred acquisition costs..........................
Insurance administrative expense(1) .......
Parent expense ...........................................
Stock-based compensation expense.......
Interest expense .........................................
203,052
94,973
—
—
—
—
—
—
—
—
22
—
—
—
—
—
—
—
—
—
240,321
10,260
44,843
—
—
—
—
—
84,306
—
—
—
—
—
—
—
—
—
—
8,758
643
(2,3)
(4)
—
—
9,401
(9,401)
$ 3,595,134
910,459
1,318
4,506,911
2,357,349
—
—
551,726
298,047
249,079
10,903
44,843
84,306
3,596,253
910,658
9,401
Total expenses....................................... 1,814,320
833,708
(9,454)
652,854
295,424
Subtotal............................................................
703,464
243,638
9,458
257,605
(294,106)
Non-operating items ...................................
—
—
—
9,401
(2,3,4)
Measure of segment profitability
(pretax) ................................................. $ 703,464
$ 243,638
$ 9,458
$ 257,605
$(294,106) $
(
(
)
)
—
920,059
Realized gain (loss)—investments ..........................................................................................................................................................
Administrative settlements........................................................................................................................................................................
Legal Proceedings .....................................................................................................................................................................................
Non-operating expenses...........................................................................................................................................................................
20,621
(400)
(8,358)
(643)
tt
Income before income taxes per Consolidated Statements of Operatrr
ions
............................................................................
$
931,279
(1) Administrative expense is not allocated to insurance segments.
(2) Administrative settlements.
(3) Legal proceedings.
(4) Non-operating expenses.
116
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Assets for each segment are reported based on a specific identification basis. The insurance segments’ assets
contain DAC. The investment segment includes the investment portfolio, cash, and accrued investment income.
is assigned to the insurance segments at the time of purchase. All other assets are included in the
Goodwill
Corporate & Other category. The tables below reconcile segment assets to total assets as reported in the
consolidated financial statements.
Assets by Segment
At December 31, 2021
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
Cash and invested assets......... $
Accrued investment income .....
— $
—
— $
—
Deferred acquisition costs.........
4,236,401
Goodwill .......................................
309,609
Other assets................................
—
675,871
172,182
—
— $ 22,850,154
$
— $ 22,850,154
—
2,456
—
251,307
—
—
—
—
—
—
251,307
4,914,728
481,791
1,270,068
1,270,068
Total assets ......................... $ 4,546,010
$
848,053
$
2,456
$ 23,101,461
$ 1,270,068
$ 29,768,048
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
At December 31, 2020
Cash and invested assets......... $
Accrued investment income .....
— $
—
— $
—
Deferred acquisition costs.........
3,982,158
Goodwill .......................................
309,609
Other assets................................
—
610,071
131,982
—
— $ 22,547,498
$
— $ 22,547,498
—
3,215
—
—
248,991
—
—
—
—
—
—
248,991
4,595,444
441,591
1,213,207
1,213,207
Total assets ......................... $ 4,291,767
$
742,053
$
3,215
$ 22,796,489
$ 1,213,207
$ 29,046,731
117
GL 2021 FORM 10-K
Globe Life Inc.
Notes to Consolidated Financial Statements
(Dollar amounts in thousands, except per share data)
Liabilities forff
each segment are reported also on a specific identification basis similar to the assets. The insurance
segments' liabilities contain future policy benefits, unearned and advance premiums, and policy claims and other
benefits payable. Other policyholders' funds are included in Other as well as current and deferred income taxes
payable. Debt represents both short and long-term. The tables below reconcile segment liabilities to total liabilities
as reported in the consolidated financial statements.
Liabilities by Segment
At December 31, 2021
Future policy benefits................. $ 12,686,851
$ 2,315,507
$ 1,032,369
$
— $
— $ 16,034,727
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
Unearned and advance
premiums .....................................
Policy claims and other
benefits payable .........................
Debt ..............................................
Other.............................................
19,874
45,598
245,108
167,832
—
—
—
—
—
—
—
—
—
—
2,026,138
—
—
—
—
2,585,965
65,472
412,940
2,026,138
2,585,965
Total liabilities .................... $ 12,951,833
$ 2,528,937
$ 1,032,369
$ 2,026,138
$ 2,585,965
$ 21,125,242
Life
Health
Annuity
Investment
Corporate &
Other
Consolidated
At December 31, 2020
Future policy benefits................. $ 12,008,396
$ 2,172,141
$ 1,062,999
$
— $
— $ 15,243,536
Unearned and advance
premiums .....................................
Policy claims and other
benefits payable .........................
Debt ..............................................
Other.............................................
18,968
42,760
237,246
162,261
—
—
—
—
—
—
—
—
—
—
1,922,804
—
—
—
—
2,648,064
61,728
399,507
1,922,804
2,648,064
Total liabilities .................... $ 12,264,610
$ 2,377,162
$ 1,062,999
$ 1,922,804
$ 2,648,064
$ 20,275,639
118
GL 2021 FORM 10-K
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURES
None.
Item 9A. Controls and Procedures
tt
and Procedures: Globe Life, under the direction of the Co-Chairmen and Chief
Evaluatiott n of Disclosure Controls
, has established disclosure controls
ff
Executive Offiff cers and the Executive Vice President and Chief Financial Officer
and procedures that are designed to ensure that informat
ion required to be disclosed by Globe Life in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also
ion is accumulated and communicated to Globe Life's management, including
intended to ensure that such informat
the Co-Chairmen and Chief Executive Officers
, as
appropriate to allow timely decisions regarding required disclosures.
and the Executive Vice President and Chief Financial Officer
ff
ff
ff
ff
under the supervision
As of the end of the fiscal year completed December 31, 2021, an evaluation was performed
and
ff
and with the participation of Globe Life management, including the Co-Chairmen and Chief Executive Officers
, of the disclosure controls and procedures (as those terms
the Executive Vice President and Chief Financial Officer
are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon their evaluation, the Co-
Chairmen and Chief Executive Officers
have
ive as of the date of this Form 10-K. In compliance with
concluded that disclosure controls and procedures are effect
Section 302 of the Sarbanes Oxley Act of 2002 (18 U.S.C. § 1350), each of these officers
executed a Certification
included as an exhibit to this Form 10-K.
and the Executive Vice President and Chief Financial Officer
ff
ff
ff
ff
ff
ff
tt
p
g
over Financial Reportingtt
Management's' Annual Report on Internal Control
is responsible for
establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under
the
the Securities Exchange Act of 1934. Management evaluated the design and operating effecti
Company's internal control over financial reporting based on the criteria established in Internal Control
Integratrr ed
Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
Based upon their evaluation as of December 31, 2021, the Co-Chairmen and Chief Executive Officers,
and the
have concluded that Globe Life's internal control over financial
Executive Vice President and Chief Financial Officer
reporting is effect
ive as of the date of this Form 10-K. In compliance with Section 302 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. § 1350), each of these offiff cers executed a Certification included as an exhibit to this Form 10-K.
veness of
tt —ll
g: Management
p
ff
ff
ff
ff
g
g: As of the period ended December 31, 2021, there have not
Changes in Internal Control
been any changes in Globe Life Inc.'s internal control over financial reporting or in other factors that could
significantly affect
this control over financial reporting subsequent to the date of their evaluation which have
ff
materially affect
ed, or are reasonably likely to materially affect
, internal control over financial reporting.
ii
over Financial
Reportingtt
p
tt
ff
ff
Refer to Deloitte & Touche LLP's,
Company's internal controls over financial reporting.
independent registered public accounting firm, attestation report on the
119
GL 2021 FORM 10-K
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management at Globe Life is responsible forff
reporting for the Company and for assessing the effecti
framework for assessing internal control over financial reporting, the Company utilizes the criteria for effecti
internal control over financial reporting described in Internal
tt —ll
rr
Committee of Sponsoring Organizations of the Treadway Commission.
establishing and maintaining adequate internal control over financial
veness of internal control on an annual basis. As a
ve
d FraFF mework (2013) issued by the
Integraterr
Control
ff
ff
There are inherent limitations in the effecti
the circumvention or overriding of controls. Accordingly, even effecti
assurance with respect
effect
iveness of internal control may vary over time.
veness of any internal control, including the possibility of human error and
ve internal controls can provide only reasonable
the
to financial statement preparation. Further, because of changes in conditions,
ff
ff
ff
Management evaluated the Company’s internal control over financial reporting, and based on its assessment,
ive as of December 31, 2021. The
determined that the Company’s internal control over financial reporting was effect
Company’s independent registered public accounting firm has issued an attestation report on the Company’s
internal control over financial reporting as stated in their report which is included herein.
ff
/s/ Gary L. Coleman
Gary L. Coleman
Co-Chairman and Chief Executive Officer
ff
/s/ Larry M. Hutchison
Larry M. Hutchison
Co-Chairman and Chief Executive Officer
ff
/s/ Frank M. Svoboda
Frank M. Svoboda
Executive Vice President and Chief Financial Offiff cer
February 23, 2022
120
GL 2021 FORM 10-K
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Globe Life Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Globe Life Inc. and subsidiaries (the “Company”) as
of December 31, 2021, based on criteria established in Internal Control
tt — Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
ive internal control over financial reporting as of December 31, 2021,
maintained, in all material respects, effect
tt — Integrated Framework (2013) issued by COSO.
based on criteria established in Internal Control
ff
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements and financial statement schedules as of and for the year
ended December 31, 2021 of the Company and our report dated February 23, 2022, expressed an unqualified
opinion on those financial statements and financial statement schedules.
Basis for Opinion
ve internal control over financial reporting and for
The Company’s management is responsible for maintaining effecti
its assessment of the effecff
tiveness of internal control over financial reporting, included in the accompanying
Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
ff
the audit to obtain reasonable assurance about whether effect
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
ive internal control over financial reporting
performff
was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effect
such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
iveness of internal control based on the assessed risk, and performing
ff
ff
ff
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect
on the financial statements.
ff
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effect
iveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
ff
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
February 23, 2022
121
GL 2021 FORM 10-K
There were no items required.
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ff
ion required by this item is incorporated by reference from the sections entitled “PROPOSAL NUMBER 1 -
Informat
Election of Directors,” “Director Nominee Profiles,” "Director Nominee Skills and Qualifications," “Executive Officers,
”
“AUDIT COMMITTEE REPORT,” “Governance Guidelines and Codes of Ethics,” “Qualifications of Directors,”
“Procedures for Director Nominations by Shareholders,” and “DELINQUENT SECTION 16(a) REPORTS” in the
Proxy Statement for the Annual Meeting of Shareholders to be held April 28, 2022 (the Proxy Statement), which is to
be filed with the Securities and Exchange Commission (SEC).
ff
ITEM 11. EXECUTIVE COMPENSATION
ff
AA
ion required by this item is incorporated by reference from the sections entitled “EXECUTIVE
Informat
“COMPENSATION COMMITTEE
COMPENSATION - COMPENSATION
“2021 GRANTS OF PLAN-BASED
REPORT”,
“SUMMARY CRR
RDS AT FISCAL YEAR-END 2021”, “OPTION EXERCISES AND
AWARDS”, “OUTSTANTT DING EQUITY AWAAA
STOCK VESTED DURING FISCAL YEAR ENDED DECEMBER 31, 2021”,
“PENSION BENEFITS AT
DECEMBER 31, 2021”, “POTENTIAL PAYPP MENTS UPON TERMINATION OR CHANGE-IN-CONTROL”, “2021
DIRECTOR COMPENSATIAA ON”, and “PAYPP MENTS TO DIRECTORS” in the Proxy Statement, which is to be filed with
the SEC.
OMPENSATIAA ON TABLE”, "CEO PAY RATIAA O",
DISCUSSION AND ANALYSLL
IS”,
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
1.
Equity Compensation Plan Information as of December 31, 2021
(a)
(b)
(c)
Number of securities
to be issued
upon exercise of
outstanding options,
warrants, and rights
Weighted-average
exercise price of
outstanding options,
warrants, and rights
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities in
column (a))
7,197,662
$
85.11
4,727,088
Plan Category
Equity compensation plans approved by
security holders...............................................
Equity compensation plans not approved
by security holders..........................................
Total ..................................................................
7,197,662
$
85.11
4,727,088
2.
3.
4.
Security ownership of certain beneficial owners:
ion required by this item is incorporated by reference from the section entitled “PRINCIPAL
ff
Informat
SHAREHOLDERS” in the Proxy Statement, which is to be filed with the SEC.
Security ownership of management:
ion required by this item is incorporated by reference from the section entitled “Stock Ownership” in
ff
Informat
the Proxy Statement, which is to be filed with the SEC.
Changes in control:
Globe Life knows of no arrangements, including any pledges by any person of its securities, the operation
of which may at a subsequent date result in a change of control.
122
GL 2021 FORM 10-K
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated by reference from the sections entitled “RELATEAA D PARPP TY
TRANSACTION POLICY AND TRANSACTIONS” and “Director
in the Proxy
Statement, which is to be filed with the SEC.
Independence Determinations”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is incorporated by reference from the section entitled “PRINCIPAL ACCOUNTING
FIRM FEES” and “PRE-APPROVAL POLICY FOR ACCOUNTING FEES” in the Proxy Statement, which is to be
filed with the SEC.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Index of documents filed as a part of this report:
Financial Statements:
Globe Life Inc. and Subsidiaries:
Page of
this report
Report of Independent Registered Public Accounting Firm..............................................................
Consolidated Balance Sheets at December 31, 2021 and 2020.....................................................
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2021 ................................................................................................................................
Consolidated Statements of Comprehensive Income for each of the three years in the period
ended December 31, 2021 ....................................................................................................................
Consolidated Statements of Shareholders’ Equity forf
each of the three years in the period
ended December 31, 2021 ....................................................................................................................
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2021 ................................................................................................................................
Notes to Consolidated Financial Statements......................................................................................
each of the three years in the period ended
Schedules Supporting Financial Statements forff
December 31, 2021:
II. Condensed Financial Information of Registrant (Parent Company)..............................................
IV. Reinsurance (Consolidated) ...............................................................................................................
Schedules not referred to have been omitted as inapplicable or not required by Regulation S-X.
54
56
57
58
59
60
61
129
133
123
GL 2021 FORM 10-K
EXHIBITS
Exhibit No.
Description
Form
Filing Date
Related
Exhibit
Page of
this Report
3.1
3.2
4.1
4.2
4.3
4.5
4.6
4.7
4.8
4.9
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
Restated Certificate of Incorporation of Globe Life Inc.
Amended and Restated By-Laws of Globe Life Inc., as
amended February 24, 2021
Trust Indenture dated as of February 1, 1987 between
Torchmark Corporation and Morgan Guaranty Trust
Company of New YorkYY , as Trustee
Fourth Supplemental Indenture dated as of September 24,
2012 between TorcTT
New York Mellon Trust Company, N. A., as Trustee,
supplementing the Indenture dated February 1, 1987
hmark Corporation and The Bank of
Junior Subordinated Indenture, dated November 2, 2001,
between TorcTT
defining the rights of the 7 3/4% Junior Subordinated
Debentures
hmark Corporation and The Bank of New YorkYY
Third Supplemental Indenture dated as of November 17,
2017 between TorcTT
hmark Corporation and Regions Bank,
as Trustee, supplementing the Junior Subordinated
Indenture dated as of November 2, 2001
Fourth Supplemental Indenture dated as of June 14, 2021
between Globe Life Inc. and Regions Bank, as Trustee,
supplementing the Junior Subordinated Indenture dated as
of November 2, 2001
Senior Indenture, dated as of September 24, 2018,
between TorcTT
Trustee
hmark Corporation and Regions Bank, as
First Supplemental Indenture, dated as of September 27,
2018, between Torchmark Corporation and Regions Bank,
as Trustee
Second Supplemental Indenture, dated as of August 21,
2020, between Globe Life Inc. and Regions Bank, as
Trustee
Form of Retirement Life Insurance Benefit Agreement
($1,995,000 face amount limit)*
Form of Retirement Life Insurance Benefit Agreement
($495,000 face amount limit)*
8-K
8-K
August 8, 2019
February 25, 2021
10-K
February 27, 2018
3.2
3.2
4.1
8-K
September 24, 2012
4.2
8-K
November 2, 2001
4.3
8-K
November 17, 2017
4.4
8-K
June 14, 2021
4.2
S-3
September 24, 2018
4.1
8-K
September 27, 2018
4.2
8-K
August 21, 2020
4.2
10-K
March 22, 2002
10.Z
10-K
March 22, 2002
10.AAAA
Torchmark Corporation Supplemental Executive Retirement
Plan*
8-K
January 25, 2007
10.1
Amendment No. 1 to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment No. 2 to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Three to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Four to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Five to the TorcTT
Supplemental Executive Retirement Plan*
hmark Corporation
Amendment Six to the Torchmark Corporation
Supplemental Executive Retirement Plan*
Amendment Seven to the TorTT chmark Corporation
Supplemental Executive Retirement Plan*
TorTT chmark Corporation Non-Employee Director
Compensation Plan, as amended and restated*
10-K
February 29, 2008
10.53
10-K
February 29, 2008
10.54
10-K
February 27, 2009
10.53
10-K
February 27, 2020
10.10
8-K
May 5, 2015
10.1
10-K
March 1, 2019
10.11
10-Q
November 5, 2020
10.2
8-K
April 29, 2008
10.1
124
GL 2021 FORM 10-K
Form
10-K
Filing Date
Related
Exhibit
Page of
this Report
February 29, 2008
10.58
8-K
January 6, 2009
10.1
10-K
February 28, 2014
10.58
10-K
March 1, 2019
10.17
8-K
8-K
8-K
8-K
8-K
May 4, 2011
April 29, 2014
May 4, 2011
May 4, 2011
10.1
10.1
10.4
10.5
February 27, 2012
10.1
10-K
February 27, 2017
10.75
10-K
February 27, 2017
10.76
10-K
February 27, 2017
10.77
10-K
February 27, 2017
10.78
Exhibit No.
10.12
Description
Form of Restricted Stock Unit Award Notice under
Torchmark Corporation Non-Employee Director
Compensation Plan*
10.13
10.14
10.15
Receivables Purchase Agreement dated as of December
31, 2008 among AILIC Receivables Corporation, American
Income Life Insurance Company and TMK Re, Ltd.
Amendment No.1 to Receivables Purchase Agreement
dated as of December 31, 2008 among AILIC Receivables
Corporation, American Income Life Insurance Company,
and TMK Re, Ltd.
Amendment No.2 to Receivables Purchase Agreement
dated as of December 31, 2008 among AILIC Receivables
Corporation, American Income Life Insurance Company,
and TMK Re, Ltd.
10.16
Torchmark Corporation 2011 Incentive Plan*
First Amendment to Torchmark Corporation 2011 Incentive
Plan*
Form of TenTT
Corporation 2011 Incentive Plan*
year Stock Option under Torchmark
Form of Seven year Stock Option under Torchmark
Corporation 2011 Incentive Plan*
Form of Performance Share Award under TorcTT
Corporation 2011 Incentive Plan*
hmark
Form of Seven Year Stock Option Grant Agreement under
Torchmark Corporation 2011 Incentive Plan, as amended
with Non-Compete, Non-Solicit and Confidentiality
Provisions*
Form of TenTT Year Stock Option Grant Agreement under
Torchmark Corporation 2011 Incentive Plan, as amended
with Non-Compete, Non-Solicit and Confidentiality
Provisions*
Form of Performance Share Award Certificate under
Torchmark Corporation 2011 Incentive Plan, as amended
with Non-Compete, Non-Solicit and Confidentiality
Provisions*
Form of Seven Year Stock Option Grant Agreement
(Special) under Torchmark Corporation 2011 Incentive Plan,
as amended with Non-Compete, Non-Solicit and
Confidentiality Provisions*
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
Torchmark Corporation Amended 2011 Non-Employee
Director Compensation Plan, effeff ctive January, 2017*
10-K
February 27, 2017
10.55
Form of Stock Option under Torchmark Corporation 2011
Non-Employee Director Compensation Plan*
10-K
February 28, 2011
10.57
Form of Restricted Stock Unit Award Notice under
Torchmark Corporation 2011 Non-Employee Director
Compensation Plan*
10-K
February 28, 2011
10.59
10.28
Torchmark Corporation 2018 Incentive Plan*
10.29
10.30
10.31
10.32
10.33
First Amendment to Torchmark Corporation 2018 Incentive
Plan*
Amended Globe Life Inc. Non-Employee Director
Compensation Plan*
Form of Performance Share Award under TorcTT
Corporation 2018 Incentive Plan*
hmark
Form of Performance Share Award under Globe Life Inc.
2018 Incentive Plan*
Form of Perforr
2018 Inventive Plan (2022)*
rmance Share Award under Globe Life Inc.
8-K
10-K
May 2, 2018
10.1
February 27, 2020
10.31
10-Q
November 4, 2021
10.1
8-K
May 2, 2018
10.3
10-K
February 27, 2020
10.34
10-K
February 23, 2022
10.33
125
GL 2021 FORM 10-K
Exhibit No.
10.34
Description
Form of Seven YearYY
2018 Incentive Plan*
Stock Option under Globe Life Inc.
Form
10-K
Filing Date
Related
Exhibit
Page of
this Report
February 27, 2020
10.36
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
Form of Seven YearYY
Corporation 2018 Incentive Plan with Non-Compete, Non-
Solicit and Confidentiality Provisions*
Stock Option under Torchmark
Form of Seven YearYY
Stock Option under Globe Life Inc.
2018 Incentive Plan with Non-Compete, Non-Solicit and
Confidentiality Provisions*
Form of Seven YearYY
Stock Option under Globe Life Inc.
2018 Incentive Plan with Non-Compete, Non-Solicit and
Confidentiality Provisions (Special)*
Form of TenTT Year Stock Option under TorcTT
Corporation 2018 Incentive Plan*
hmark
Form of TenTT Year Stock Option under TorcTT
Corporation 2018 Incentive Plan with Non-Compete, Non-
Solicit and Confidentiality Provisions*
hmark
8-K
May 2, 2018
10.5
10-K
February 27, 2020
10.38
10-K
February 27, 2020
10.39
8-K
8-K
May 2, 2018
May 2, 2018
10.6
10.7
Form of Stock Option under Globe Life Inc. 2018 Non-
Employee Director Compensation Plan*
10-K
February 27, 2020
10.44
Form of Restricted Stock under Globe Life Inc. 2018 Non-
Employee Director Compensation Plan*
10-K
February 27, 2020
10.45
Form of Restricted Stock Unit Award Notice under Globe
Life Inc. 2018 Non-Employee Director Compensation Plan*
10-K
February 27, 2020
10.46
Torchmark Corporation 2019 Management Incentive Plan
(effective
as of January 1, 2019)*
ff
8-K
March 4, 2019
10.1
The Globe Life Inc. Amended and Restated Pension Plan
Generally Effeff ctive as of January 1r
, 2020*
10-Q
November 5, 2020
10.1
10.45
Globe Life Inc. Savings and Investment Plan*
10.46
Payments to Directors*
Amended and Restated Credit Agreement dated as of
September 30, 2021 among Bank of America, N.A., the
Lenders party thereto, Globe Life Inc. and TMK RE, LTD.
10-K
10-Q
8-K
February 27, 2020
10.52
November 4, 2021
October 1, 2021
10.2
10.1
Form of Performance Share Award under Globe Life Inc.
2018 Incentive Plan (2021)*
10-K
February 25, 2021
10.56
Subsidiaries of the registrant
Consent of Deloitte & Touche
TT
LLP
Powers of Attorney
Rule 13a-14(a)/15d-14(a) Certification by Gary L. Coleman
Rule 13a-14(a)/15d-14(a) Certification by Larry M.
Hutchison
Rule 13a-14(a)/15d-14(a) Certification by Frank M.
Svoboda
128
10-K
10-K
10-K
10-K
10-K
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
21
23
24
31.1
31.2
10-K
February 23, 2022
31.3
Section 1350 Certification by Gary L. Coleman, Larry M.
Hutchison and Frank M. Svoboda
10-K
February 23, 2022
32.1
101.INS
XBRL Instance Document- the instance document does not
appear in the Interactive Data file because the XBRL tags
are embedded within the Inline XBRL document.
10-K
February 23, 2022
101.INS
101.SCH
Inline XBRL TaxTT onomy Extension Schema Document.
101.CAL
Inline XBRL TaxTT onomy Extension Calculation Linkbase
Document.
10-K
10-K
February 23, 2022
101.SCH
February 23, 2022
101.CAL
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase
Document.
10-K
February 23, 2022
101.LAB
126
GL 2021 FORM 10-K
10.47
10.48
21
23
24
31.1
31.2
31.3
32.1
Exhibit No.
101.PRE
Description
Inline XBRL TaxTT onomy Extension Presentation Linkbase
Document.
Form
10-K
Filing Date
Related
Exhibit
Page of
this Report
February 23, 2022
101.PRE
101.DEF
Inline XBRL TaxTT onomy Extension Definition Linkbase
Document.
10-K
February 23, 2022
101.DEF
104
Cover Page Interactive Data File (formatted as inline XBRL
with applicable taxonomy extension informatio
in Exhibits 101).
n contained
ff
10-K
February 23, 2022
104
* Compensatory plan or arrangement.
** To be filed with the Securities and Exchange Commission within 120 days afteff
r the fiscal year ended December 31, 2021.
127
GL 2021 FORM 10-K
:
t 21. Subsidiaries of the Registrant
Exhixx bi
ii
definition of “significant subsidiary” according to Regulation S-X:
g
tt
The following table lists subsidiaries of the registrant which meet the
Name Under Which Company Does
Business
Globe Life And Accident
Insurance Company
American Income Life
Insurance Company
Liberty National Life
Insurance Company
Family Heritage Life
Insurance Company of America
State of
Incorporation
Nebraska
Indiana
Nebraska
Ohio
Distribution Channel (Division)
Direct to Consumer
American Income Life Division
Liberty National Division
Family Heritage Division
While United American Insurance Company (Nebraska) does not qualify aff
with Regulation S-X, management views this subsidiary as significant to our operations.
s a significant subsidiary in accordance
All other exhibits required by Regulation S-K are listed as to location in the “Index of documents filed as a part of
this report” in this report. Exhibits not referred to have been omitted as inapplicable or not required.
128
GL 2021 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT
Condensed Balance Sheets
(Dollar amounts in thousands)
December 31,
2021
2020
Assets:
Investments:
Long-term investments ....................................................................................................................... $
31,384
$
Short-term investments.......................................................................................................................
Total investments...............................................................................................................................
Cash .........................................................................................................................................................
—
31,384
20,228
32,861
19,300
52,161
1,644
Investment in affiliates
ff
...........................................................................................................................
10,618,826
10,526,982
Due from affiliates
ff
..................................................................................................................................
Taxes receivable from affiliates
ff
............................................................................................................
Other assets............................................................................................................................................
170,983
33,229
185,143
322,278
51,041
184,588
Total assets ........................................................................................................................................ $ 11,059,793
$ 11,138,694
Liabilities:
Short-term debt....................................................................................................................................... $
629,607
$
254,918
Long-term debt .......................................................................................................................................
1,546,494
1,817,798
Other liabilities ........................................................................................................................................
240,886
294,886
Total liabilities.....................................................................................................................................
2,416,987
2,367,602
Shareholders’ equity:
Preferred stock .......................................................................................................................................
Common stock........................................................................................................................................
Additional paid-in capital .......................................................................................................................
Accumulated other comprehensive income.......................................................................................
Retained earnings ..................................................................................................................................
351
109,218
871,075
2,677,583
6,182,100
351
113,218
877,946
3,029,244
5,874,109
Treasury stock ........................................................................................................................................
(1,197,521)
(1,123,776)
Total shareholders’ equity ................................................................................................................
8,642,806
8,771,092
Total liabilities and shareholders’ equity ........................................................................................ $ 11,059,793
$ 11,138,694
See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
129
GL 2021 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
Condensed Statement of Operations
(Dollar amounts in thousands)
Net investment income........................................................................................................ $
Realized gains (losses).......................................................................................................
Total revenue .............................................................................................................
Year Ended December 31,
2021
2020
2019
32,816
$
30,199
$
28,869
(5,682)
27,134
12,792
42,991
—
28,869
General operating expenses..............................................................................................
Reimbursements from affiliates
ff
.........................................................................................
Interest expense...................................................................................................................
Total expenses ..........................................................................................................
51,378
(57,504)
86,751
80,625
57,679
(68,556)
90,197
79,320
Operating income (loss) before income taxes and equity in earnings of affiliates
ff
....
(53,491)
(36,329)
Income tax expense ............................................................................................................
9,682
7,773
Net operating loss before equity in earnings of affiliates
ff
...............................................
(43,809)
(28,556)
Equity in earnings of affiliates, net of tax..........................................................................
Net income ..................................................................................................................
788,768
744,959
760,329
731,773
68,419
(65,928)
89,317
91,808
(62,939)
13,133
(49,806)
810,596
760,790
Other comprehensive income (loss):
Attributable to Parent Company .....................................................................................
58,903
(21,477)
(11,379)
Attributable to affiliates
ff
.....................................................................................................
(410,564)
1,205,891
1,536,734
Comprehensive income (loss) ................................................................................... $
393,298
$ 1,916,187
$ 2,286,145
See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
130
GL 2021 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT—(continued)
Condensed Statement of Cash Flows
(Dollar amounts in thousands)
Year Ended December 31,
2021
2020
2019
Net income ......................................................................................................................... $
Equity in earnings of affiliates..........................................................................................
744,959
$
731,773
$
760,790
(788,768)
(760,329)
(810,596)
Cash dividends from subsidiaries...................................................................................
Other, net............................................................................................................................
Cash provided from operations .................................................................................
478,535
58,617
493,343
485,871
21,129
478,444
479,988
65,584
495,766
Cash provided from (used for) investing activities:
Net decrease (increase) in short-term investments..................................................
Investment in subsidiaries.............................................................................................
Other long-term investments ........................................................................................
Additions to properties...................................................................................................
19,300
(159,924)
(2,500)
—
(15,899)
(7,875)
—
—
(3,380)
—
—
(32)
Loaned money to affiliates............................................................................................
(1,049,932)
(1,008,860)
(501,764)
Repayments from affiliates
ff
...........................................................................................
1,200,932
782,860
Cash provided from (used for) investing activities ..............................................
7,876
(249,774)
501,764
(3,412)
Cash provided from (used for) financing activities:
Repayment of debt.........................................................................................................
(300,000)
(386,875)
(6,875)
Proceeds from issuance of debt ..................................................................................
325,000
700,000
Payment for debt issuance costs.................................................................................
Net issuance (repayment) of commercial paper .......................................................
Issuance of stock............................................................................................................
(7,687)
74,974
69,826
(5,844)
(34,445)
48,093
—
—
(11,610)
82,771
Acquisitions of treasury stock.......................................................................................
(541,435)
(443,866)
(459,569)
Borrowed money from affiliate
ff
.....................................................................................
Repayments to affiliates
ff
................................................................................................
Payment of dividends ....................................................................................................
Cash provided from (used for) financing activities ..............................................
Net increase (decrease) in cash .....................................................................................
Cash balance at beginning of period..............................................................................
32,000
(32,000)
(103,313)
(482,635)
18,584
1,644
76,000
277,000
(79,500)
(276,500)
(101,462)
(227,899)
(97,458)
(492,241)
771
873
113
760
873
Cash balance at end of period ........................................................................................ $
20,228
$
1,644
$
See Notes to Condensed Financial Statements and accompanying Report of Independent Registered
Public Accounting Firm.
131
GL 2021 FORM 10-K
Globe Life Inc.
(PARENT COMPANY)
SCHEDULE II. CONDENSED FINANCIAL INFORMATION OF REGISTRANT (continued)
Notes to Condensed Financial Statements
(Dollar amounts in thousands)
Note A—Dividends from Subsidiaries
Cash dividends paid to Globe Life from the subsidiaries were as follows:
Dividends from subsidiaries............................................................................................. $
478,535
$
485,871
$
479,988
Note B—Supplemental Disclosures of Cash Flow Information
The following table summarizes non-cash transactions, which are not reflected on the Condensed Statements ott
Cash Flows:
f
Year Ended December 31,
2021
2020
2019
Year Ended December 31,
2021
2020
2019
Stock-based compensation not involving cash ............................................................ $
30,272
$
35,892
$
44,843
Contribution of property to subsidiary ............................................................................
5,004
—
—
The foll
f owing table summarizes certain amounts paid (received) during the period:
Interest paid........................................................................................................................ $
Income taxes paid (received) ..........................................................................................
86,206
$
86,504
$
86,868
(11,838)
(12,744)
(16,617)
Year Ended December 31,
2021
2020
2019
Note C—Preferred Stock
As of December 31, 2021, Globe Life had 351 thousand shares of Cumulative Preferred Stock, Series A, issued and
outstanding, of which 280 thousand shares were 6.50% Cumulative Preferred Stock, Series A, and 71 thousand
shares were 7.15% Cumulative Preferred Stock, Series A (collectively, the “Series A Preferred Stock”). All issued
and outstanding shares of Series A Preferred Stock were held by wholly-owned insurance subsidiaries. In the event
of liquidation, the holders of the Series A Preferred Stock at the time outstanding would be entitled to receive a
liquidating distribution out of the assets legally available to stockholders in the amount of $1 thousand per share or
$351 million in the aggregate, plus any accrued and unpaid dividends, beforeff
any distribution is made to holders of
Globe Life common stock. Holders of Series A Preferred Stock do not have any voting rights nor have rights to
convert such shares into shares of any other class of Globe Life capital stock.
See accompanying Report of Independent Registered Public Accounting Firm.
132
GL 2021 FORM 10-K
Globe Life Inc.
SCHEDULE IV. REINSURANCE (CONSOLIDATED)
(Dollar Amounts in thousands)
Gross
Amount
Ceded
to Other
Companies(1)
Assumed
from Other
Companies
Net
Amount
Percentage
of Amount
Assumed
to Net
For the Year Ended December 31, 2021
Life insurance in force .................................. $ 217,350,660
Premiums(2):
$
648,766
$
2,371,163
$ 219,073,057
Life insurance.............................................. $
Health insurance.........................................
2,868,759
$
4,286
$
19,502
$
2,883,975
1,192,567
3,312
12,421
1,201,676
Total premium ........................................ $
4,061,326
$
7,598
$
31,923
$
4,085,651
For the Year Ended December 31, 2020
Life insurance in force .................................. $ 203,894,460
Premiums(2):
$
669,063
$
2,551,770
$ 205,777,167
Life insurance.............................................. $
Health insurance.........................................
2,642,555
$
4,241
$
19,775
$
2,658,089
1,144,470
3,373
—
1,141,097
Total premium ........................................ $
3,787,025
$
7,614
$
19,775
$
3,799,186
For the Year Ended December 31, 2019
Life insurance in force .................................. $ 191,249,516
Premiums(2):
$
676,988
$
2,774,388
$ 193,346,916
Life insurance.............................................. $
Health insurance.........................................
2,486,127
$
4,357
$
20,384
$
2,502,154
1,080,869
3,523
—
1,077,346
Total premium ........................................ $
3,566,996
$
7,880
$
20,384
$
3,579,500
1.1
0.7
1.0
0.8
1.2
0.7
—
0.5
1.4
0.8
—
0.6
(1) No amounts have been netted against ceded premium.
(2) Excludes policy charges of $14.2 million, $14.7 million, and $15.6 million in each of the years 2021, 2020, and 2019, respectively.
See accompanying Report of Independent Registered Public Accounting Firm.
133
GL 2021 FORM 10-K
Pursuant to the requirements of Section 12 or 15(d) of the Securities Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
By:
By:
By:
By:
Globe Life Inc.
/s/ GARY LRR
. COLEMAN
Gary L. Coleman
Co-Chairman and Chief Executive Officer and Director
/s/ LARRY MRR
. HUTCHISON
Larry M. Hutchison
Co-Chairman and Chief Executive Officer and Director
/s/ FRANK M. SVOBODA
Frank M. Svoboda
Executive Vice President and Chief Financial Officer
/s/ M. SHANE HENRIE
M. Shane Henrie
Corporate Senior Vice President and Chief Accounting Officer
Date: February 23, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
By:
By:
By:
By:
By:
/s/ JANE BUCHAN *
Jane M. Buchan
Director
/s/ ROBERT W. INGRAM *
Robert W. Ingram
Director
/s/ STEVEN P. JOHNSON *
Steven P. Johnson
Director
/s/ DARREN M. REBELEZ *
Darren M. Rebelez
Director
/s/ MARY ERR
. THIGPEN *
Mary E. Thigpen
Director
By:
By:
By:
By:
By:
By:
/s/ CHARLES E. ADAIR *
Charles E. Adair
Director
/s/ LINDA L. ADDISON *
Linda L. Addison
Director
/s/ MARILYNLL
A. ALEXANDER *
Marilyn A. Alexander
Director
/s/ CHERYLRR
D. ALSTON *
Cheryl D. Alston
Director
/s/ MARK A. BLINN *
Mark A. Blinn
Director
/s/ JAMES P. BRANNEN *
James P. Brannen
Director
Date: February 23, 2022
*By:
/s/ FRANK M. SVOBODA
Frank M. Svoboda
Attorney-in-fact
134
GL 2021 FORM 10-K
[THIS PAGE INTENTIONALLY LEFT BLANK]
[THIS PAGE INTENTIONALLY LEFT BLANK]
In addition to the training and opportunities, the Company
Marissa was super knowledgeable
is steady and strong with consistent growth year over
about the different coverages and
year. With strong management, the Company is sure to be
really helped me narrow down the
around for many more years to come.
best plan for myself. With being a
- Erika, Employee
travel nurse my plans were always
changing between companies but
Earnest was very thorough in fulfilling my policy needs. I
it is nice to have the reassurance
felt like I was getting fitted for a suit that fits perfectly! Will
and not worry! Thank you again
be adding even more coverage soon to come!
Marissa for the wonderful help.
- Vonte, Policyholder
- Angelina, Policyholder
Very affordable and easy
I’m glad I took the 15 minutes to hear what Diana had to offer. The
to understand. I’m looking
Globe Life Liberty National Worksite Advantage program was
forward to moving along in my
exactly what I was looking for for my small business employees! I
journey knowing you guys have
highly recommend the program to other business owners looking
my back. Thank you.
to establish or enhance benefits for their employees. Give Diana 15
- Dylan, Policyholder
minutes. You won’t regret it!
- Gage, Policyholder
After losing a loved one Jakwanza built
Wow! For once an insurance policy that pays you
a bond with me and my family in our
back! We have paid into insurance half our lives, never
time of need. She was very helpful and
used it because we are healthy and for the most part
concerning. It wasn’t just about a policy.
not accident prone. Jason was brilliant in explaining
Thank you all Globe Life!
this program, and was very knowledgeable and
- Conetric, Policyholder
professional. I will refer people for sure!
- Linda, Policyholder
After the death of my brother, not once did I call Globe Life and the person on the other end of the phone
not offer their condolences. This really meant a lot to me. They were very professional and considerate and
caring. Thanks Globe Life!
- Dian, Policyholder
We’re very happy with United American. We met with this guy right after I retired so I’ve been with him for
a long time. He’s at our disposal and he’s great. I’ve given him a lot of business from some other friends of
mine. My husband and I were in New York and he fell and broke his hip. We were thinking of the load of bills
we were going to get. We have Medicare but everything was covered with United American.
- Ronni, Policyholder
3700 S Stonebridge Drive
McKinney, Texas 75070
www.GlobeLifeInsurance.com